Jordan investors set to buy Arab Bank stake after Saudi bid fades

Banking sources say consortium bids for Saudi Oger's 20% stake after Alhokair drops $1.1bn offer
Jordan investors set to buy Arab Bank stake after Saudi bid fades
By Reuters
Mon 05 Dec 2016 08:47 PM

A Jordanian consortium has bid for Saudi Oger's 20 percent stake in Arab Bank Group after the family of Saudi Arabia's Fawaz Alhokair dropped its own $1.1 billion offer, banking sources told Reuters on Monday.

A deal with investors led by Arab Bank Group's chairman Sabih al Masri, a leading Jordanian businessmen with extensive holdings in banking and hotels, could be imminent, they said.

The Alhokair family was in talks to buy the stake in the Jordan-based bank, one of the Arab world's largest privately owned banks, after construction giant Saudi Oger began seeking buyers to help ease cashflow problems brought on by difficulties in the Saudi building sector..

Saudi Oger is owned by the family of Lebanese Prime Minister-designate Saad al-Hariri and the Arab Bank sale was expected to help it repay a $1.03 billion loan from regional and international banks due to mature in February.

The Alhokair family and Saudi Oger were not immediately available for comment.

"A transaction has been finalised. Sabih Masri has put together a Jordanian led deal to purchase the shares from Oger after the Alhokair offer played itself out," one source said, adding that the valuation was based on the bank's share price.

Arab Bank's shares closed at 6.06 dinars ($8.5) on Monday and bankers said the Alhokair family's bid had been driven by the bank's stock market value being well below its book value.

The banks' 40 percent stake in Saudi Arabia's Arab National Bank, was also a major attraction for the Alhokair family group, which is best known for its fashion retailing business.

Two sources said the Jordanian consortium was not bidding with Alhokair and there was no auction.

"Alhokair is out for whatever reason and Sabih al Masri is in...it's not a competition. The Jordanian group did not come in with a higher price. There is no bidding war," one said.

It was not clear what had ended an Alhokair deal, but Jordanian authorities, who consider Arab Bank a pillar of the country's economy, had resisted any non-Jordanian investor becoming the single largest shareholder in the bank.

"There has historically been a battle to keep the bank as Jordanian as possible. Whoever buys 20 percent and becomes the largest shareholder surely would influence it. This would have be alarming to the Jordanians," a senior financial source said.

Jordan sought to prevent Hariri family business entities from dominating the bank nearly a decade ago and some board members had questioned why a foreign investor should buy the stake at a fire sale price, a third source said.

Local investors were also angry that Alhokair was not seeking to buy the stake with its own money but mostly with cash raised from a banking syndicate, with the shares as collateral.

Arab Bank's growth has long been tied to its regional and global expansion. The bank has assets of more than $46 billion, 600 branches on five continents and a reputation for withstanding political upheaval.

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