Groundbreaking buyout, soaring
profits leave investors non-phased
- FIMBank emerges triumphant in battle for London Forfaiting
By David Lindsay
Despite having announced that its profits for the first half of this
year had leapt more than twice as high as last years and after
announcing Friday it had emerged triumphant in its battle to acquire
the world-leading London Forfaiting Company, Maltas investing
community still appears numb to the enormous growth potential Malta
Stock Exchange-listed First International Merchant Bank holds at the
On Monday the Bank, which walked in for business at London Forfaiting
the same morning, announced that profits for the first six months of
the year had increased from USD391,615 in 2002 to USD889,165 this year.
Earnings per share for the period had likewise risen from USD0.85c to
Gains like these are promising, but even more appealing is its successful
buyout of the London Forfaiting Company. The acquisition had been somewhat
touch and go over the last weeks, after a rival bid had appeared. But
it was back-slapping all around on Friday when FIMBank announced it
had emerged with the keys to LFC, a world leading forfaiting company.
Incorporating LFCs operations into FIMBank is expected to be lucrative
for the now quickly growing local trade finance bank.
The deal is significant in a number of ways: FIMBank has now placed
itself in a position to become the worlds leading bank dealing
in the area of forfaiting; FIMBank shareholders can now prospectively
look toward higher dividends and a growing value for their shares; FIMBank
has now marked itself as the first Maltese business to purchase an internationally
listed firm; and the bank has also become the first Maltese bank to
purchase a foreign bank.
FIMBank will be carrying out a major restructuring exercise
and will accordingly be transferring much back office administrative
operations to Malta, where the now merged companies
nerve centre will be located.
But despite the attractions, interest in FIMBanks US dollar denominated
shares has been sparse. In fact, Monday had seen no trading in FIMBank
shares. But yesterday matters began to pick up, with 12,700 shares changing
hands in three separate deals all the unchanged price of USD1.17 .
Malta-based First International Merchant Bank announced Friday it has
prevailed in the battle to purchase the London Forfaiting Company after
sparring off with rival bidder British corporate raider Jonathan Rowland.
FIMBank had initiated a takeover bid on 22 July, which was later seized
upon by Resurge, a company run by Rowland. However, FIMBanks hard
cash offer has proved more attractive than Resurges share offer
to LFC shareholders, 65 per cent of which have put their stamp of approval
on the FIMBank offer.
FIMBank Executive Vice President and internationally renowned forfaiting
expert Magrith Lutschd-Emmenegger on Friday referred to the deal as
a "paramount transaction".
FIMBank has paid GBP30.9 million for LFC - a tidy sum indeed, but the
return on its investment is expected to greatly overshadow the expenditure.
FIMBanks growth potential is now great and wide-ranging. The London
Forfaiting Company is recognised as market leader in forfaiting, with
what is considered to be the best client base of exporters and importers
in the world.
LFC at present employs a multi-national workforce of 63 professionals
and has marketing offices in eight countries representing a well-oriented
global network that FIMBank is looking to capitalise upon, as well as
the LFC brand name, which carries a certain amount of clout in international
But while FIMBank is seeking entry into the major leagues of trade finance,
it is, not by any stretch of the imagination, a stranger to the arena.
In fact, FIMBank has always been active in trade finance, which has
consistently been its core business. The bank has also had aspirations
of becoming a player of global proportions and has now successfully
placed itself in pole position to do just that.
While LFC is the closest a forfaiting company can get to being a household
name, neither is it a stranger to adversity. It had, in fact, run into
troubled waters in 1997 during the emerging markets crisis of 1997 when
the Asian, Brazilian and Russian markets it was involved in had crashed.
LFC, despite its problems in the past, still enjoys a very well established
name in the market. All its debts have been repaid and FIMBank starts
LFC operations with a clean slate in this respect.
The company emerged from the turmoil with its forfaiting book in very
good shape. LFCs current running costs are over its profit levels,
but FIMBank expects to reach a break even point by the end of the year.