June
2000
Dewan Salman Fibres Limited
Sole Placement Agent on the Largest TFC Offering in Pakistan
During the course of the negotiations between the parties in the Dhan Fibres acquisition, it became clear that Pakistan's largest banks had insufficient liquidity to finance the entire acquisition price of Rs. 4.2 billion. AKD Securities agreed to privately place Rs. 1.6 billion worth of Term Finance Certificates (TFCs) in order to help finance the acquisition.
It was the client's requirement that the TFCs not be placed with any of the leading banks in Pakistan, so as not to interfere with their relationships with existing creditors. Although only banks can directly purchase TFCs from companies in Pakistan, AKD was able to effect the sale exclusively to non-bank financial institutions through an innovative transaction structure. AKD assembled a group of 17 leading institutional investors to purchase the entire amount of TFCs which it had committed to place.
Besides being the largest TFC offering in Pakistan ever and the first sold exclusively to non-bank investors, the Dewan Salman transaction was the first TFC placement secured entirely by shares in an acquired company.
AKD's TFC trading desk is actively creating a market in the TFCs and has already arranged a number of trades subsequent to the original issue. AKD is currently working on a Rs. 2 billion offering of public TFCs which will be exchanged for the existing private TFCs and will provide Rs. 400 million of capital for Dewan Salman.
