KARACHI: Bank Alfalah Limited intends to invest around $10 million to obtain 30 percent equity stakes in Sapphire Wind Power Company Limited, subject to the regulatory approval and the approval by shareholders through an extraordinary general meeting, an official of the bank told The News on Thursday.
The bank’s meeting is scheduled on November 22, 2013. “The wind power project is expected to be commercially viable and will help bridge the country’s power deficit,” said the bank’s official. The official further said the Overseas Private Investment Corporation (OPIC) is financing 100 percent of the debt of the project, while Bank Alfalah plans to hold 30 percent equity in it. It is important to mention that the OPIC of the United States and Sapphire Wind Power Company signed an agreement for setting up a 50 megawatts green field wind power project in Jhimpir, Sindh
Sapphire Textile Mills Limited and Bank Alfalah Ltd sponsored the project. The OPIC is also extending financial assistance. Commenting on the bank’s plan, analysts said the banks prefer to make such an investment in the infrastructure projects. Therefore, the Abu Dhabi Group is eager to acquire some equity shares in the wind power company. Notably, the initial public offering (IPO) of the company is expected to be held at the Karachi Stock Exchange soon. In the IPO, shares are offered first time to the public.
The bank’s annual report for 2012 said Bank Alfalah holds the sixth largest position by size in the sector. The bank enjoys approximately seven percent of the market share with total assets in excess of Rs500 billion. The balance sheet of the bank showed its deposits crossed Rs450 billion mark at the end of 2012, while loans and advances shot up by 18 percent over the preceding year. Profit before taxation for the year 2012 depicted a growth of 25 percent over the last year with earnings per share improving by 30 percent. Bank’s revenue from fee-based income has also significantly improved, growing by 36 percent over the previous year.
The bank has a network of 471 branches, including 110 Islamic banking branches, seven foreign branches (five in Bangladesh and two in Afghanistan) and one offshore banking unit in Bahrain. The financial summary of the bank depicted the bank is well-capatilised as its capital adequacy ratio stands at 12.67 percent, while the non-performing loan (NPL) formation was 16 percent for the year. However, the loans to NPL ratio of 8.9 percent were lower than that of the overall industry in general with NPL coverage prudently maintained at 63 percent.
The wind project will help alleviate the mounting debt in the Pakistan’s power sector since the Project will use wind, a free and renewable resource, as its fuel.
Source: The NEWS