BRAC Bank has decided to acquire majority stakes in an investment bank and its affiliate brokerage house.
With the purchase of 51 percent shares in Equity Partners Limited (EPL) and another 51 in Equity Partners Securities Limited (EPSL) for Tk 59.20 crore, the bank will venture into capital market business.
A 'term sheet' agreement was signed yesterday between the two sides as per the bank board's decision on such acquisition Monday, according to Dhaka Stock Exchange website.
“Apart from commercial banking, we are trying to enter the equity market,” AEA Muhaimen, managing director of BRAC Bank, told The Daily Star.
“We want to become such a financial institution from where we can offer the entire gamut of financial services to our customers,” he added.
The final agreement is likely in a span of six weeks on settling all terms and conditions.
The acquisition is however subject to approval from regulatory bodies, including Bangladesh Bank and Securities and Exchange Commission.
BRAC Bank, with institutional shareholdings by the Bangladesh Rural Advancement Committee, International Finance Corporation and Shore Cap International, is one of the fastest growing banks.
EPL, a joint venture company, provides merchant banking, brokerage and asset management services.
EPSL is the securities affiliate of EPL, having a membership at both Dhaka and Chittagong stock exchanges. The firm offers brokerage services to international and domestic institutions and retail clients.
“We will issue new shares to BRAC Bank and the new capital will be utilised for the companies' business diversification such as more participation in daily transaction, portfolio management and attracting foreign investment through banking channel,” said Saiful Islam, managing director of EPL.
“BRAC Bank chooses us as it wants to take a strong position in the capital market through investment bank like us,” he said.
Following the acquisition news, prices of each BRAC Bank share rose as high as by 8.12 percent to Tk 649.50 compared to previous day's closing at Tk 600.25.
Earlier in February this year, the BRAC Bank pulled back from a bid to buy 51 percent shares in GSP Finance Company Ltd (GSP), although the bank signed a memorandum of understanding with the GSP Finance.
The bank in a statement had said the two organisations could not reach an agreement because of differences on key areas.
sarwar@thedailystar.net