Asia

Malik Riaz Steps Into Banking Sector With Acquisition Of Escorts Investment Bank

After establishing his undeterred empire in the real estate industry, the Bahria Town tycoon Malik Riaz has now set his eyes upon another play-field: the money market. As per an official statement released by the Bahria Town Ltd on Tuesday said that the company intends to acquire a majority shareholding in Escorts Investment Bank, a non-banking finance company. The company has filed an official expression of interest.

This isn’t the first time Riaz has expressed his intent to step into the banking sector. In July 2015, rumors were ripe of Burj Bank acquisition by the real estate mogul, however, despite confirmation of the deal from both the sides, the transaction could not materialize. In Pakistan, getting a license to own a commercial bank requires SBP’s approval. Since a bank is allowed to receive and deal in public’s money, it is a highly regulated industry world-over. The prospect of acquisition of majority stake in Burj Bank was thawed after the State Bank of Pakistan (SBP) turned down Bahria Town’s request of acquisition for unknown reasons. Burj Bank was later acquired by Al-Baraka bank in 2016.

This time around, the situation is different. State Bank of Pakistan can not interfere in the acquisition as Malik Riaz purchases over 71% shares of Escorts Investment Bank Limited (EIBL) along with its management control. EIBL is not a commercial bank and is considered a non-banking finance company in technical terms, therefore, it is only regulated by Securities and Exchange Commission of Pakistan (SECP) with no jurisdiction of the banking regulator.

AKD Securities stated on behalf of Bahria Town, in a regulatory filing to the Pakistan Stock Exchange, that the real estate company is interested in buying up to 71.16 per cent shares in the relatively small investment bank along with management control.

It is pertinent to note here that unlike commercial banks, investment banks sphere of dealings mostly revolves around the corporate sector, trade shares in bulk and they do not accept deposits from the general public.

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