Bank Alfalah has disclosed its strategy to repurchase up to 200 million ordinary shares, each with a face value of Rs. 10, through the Pakistan Stock Exchange. The decision was made during a meeting of the bank’s board of directors on November 10, according to a recent stock filing.
The purpose behind the share repurchase is the cancellation of shares by the bank, with an estimated cost of approximately Rs. 2 billion. This move aims to buy back up to 11.25 percent of the bank’s current issued and paid-up share capital.
The shares will be purchased at the prevailing spot/current price, deemed acceptable by the bank, during the purchase period, as per Regulations 8(2) and subject to Section 88(8)-PSX. The buyback period is scheduled to take place between December 14, 2022, and June 2, 2023, or until the purchase is completed, whichever comes first. Bank Alfalah intends to utilize its distributable profits to fund the share repurchase.
The board of directors has recommended this repurchase as it is expected to enhance the bank’s share’s breakup value, return on equity, and profits per share. Additionally, it will offer shareholders the opportunity to withdraw their deposits either in full or in part.
The bank’s management will seek the shareholders’ approval through a special resolution at an extraordinary general meeting next month. Furthermore, the State Bank of Pakistan’s authorization is required to proceed with the bank’s request.
A share repurchase, also known as a stock buyback, involves a company paying shareholders the market price per share and reabsorbing a portion of its ownership previously held by public and private investors. This method has gained popularity as a preferred way to return money to shareholders, surpassing dividend payments in the current business landscape.
As of the latest trading session, the share price of Bank Alfalah (BAFL) at the stock exchange closed at Rs. 34.26, marking a gain of Rs. 2.39 or 7.50 percent, with a turnover of 21.31 million shares.
