Fimbank plc, the Malta-headquartered trade finance bank, has formally received a joint offer by Burgan Bank SAK and United Gulf Bank BSC, according to an announcement on the Malta Stock Exchange. The offer provides for “a comprehensive approach culminating in a rights issue to increase the bank’s capital”. Burgan and UGB could potentially acquire a controlling interest in Fimbank.
Fimbank’s board has resolved to recommend that issues relating to the offer be presented to an extraordinary general meeting for shareholders on January 31.
Fimbank first announced it had been given a presentation by Burgan Bank of its plans in March.
Burgan Bank is licensed by the Central Bank of Kuwait. United Gulf Bank is licensed as a conventional wholesale bank by the Central Bank of Bahrain.
Both are part of the Kuwait Projects Company Group, which has significant, diverse investments in the Middle East and North Africa.
Burgan Bank was established in 1977 and is the youngest commercial bank based in Kuwait with a focus on the corporate and financial institutions sectors, besides growing retail and private bank customer base. It has four majority-owned subsidiaries: Gulf Bank Algeria, Bank of Baghdad, Jordan Kuwait Bank, and Tunis International Bank.
United Gulf Bank manages a regional network of investment banking and asset management companies. Its proprietary investments include assets in real estate, private equity, structured products and quoted securities. It had assets under management exceeding $8 billion by last September 30.
Initially, Burgan and UGB will acquire 37.56 per cent of the bank’s capital through a combination of debt-to-asset swap and an outright acquisition, both with Massaleh Investments KSCC.
Concurrently, UGB will provide a loan of $60 million to the bank which may, at UGB’s option, be converted into newly issued listed shares of the bank. The convertible loan is divided into two tranches. UGB is also expected to launch a bid to all the bank’s shareholders for their shares as part of the process.
At the end of this multi-step approach, the bank will launch a rights issue to raise a minimum of $100 million on terms that would eventually have to be determined and announced by the bank.
UGB and Burgan have undertaken to subscribe in full to all the new ordinary shares to which it will be entitled under this rights issue.
Under the offer for Fimbank, UGB and Burgan will not require or implement any material changes to the bank’s current business model as a trade finance specialist while the bank will not issue any new shares, except for current executive share options, that may dilute UGB’s or Burgan’s proposed shareholding.
The offer has to satisfy several conditions, including that all necessary regulatory and corporate approvals are obtained, in Malta, Bahrain, and Kuwait.