bt@nstp.com.my
2010/05/15
CIMB says it would buy about 17 per cent of Bank CIMB Niaga from Khazanah Nasional for RM1.7 billion.
Malaysia's second largest banking group, CIMB Group Holdings Bhd (1023), plans to raise its stake in Indonesia's fifth largest lender by up to 19.7 per cent to better leverage on that country's fast-growing economy.
If successful, its shareholding in Bank CIMB Niaga will increase to 97.9 per cent from 78.3 per cent at present.
CIMB announced in a stock exchange filing yesterday that it would buy about 17 per cent of the lender from Khazanah Nasional Bhd for RM1.7 billion.
Khazanah, which is Malaysia's investment arm, has the option of selling to CIMB another 2.7 per cent stake for RM254 million if it wants to dispose of its entire holdings in CIMB Niaga.
As payment, CIMB will issue up to 134 million new shares to Khazanah priced at RM14.50 each.
Khazanah currently owns 28 per cent of CIMB.
"This deal increases our exposure to Indonesia and is consistent with our optimism about the market as a whole, and CIMB Niaga in particular. We expect it to be earnings-per-share accretive," CIMB group chief executive Datuk Seri Nazir Razak said in a press statement.
The transaction is expected to be completed in the final quarter of this year.
Analyst Keith Wee of OSK Research said it was a "logical and good move" for CIMB to raise its stake in the Indonesian bank now. The Indonesian economy grew 5.7 per cent in the first quarter, its fastest pace in more than a year.
"That's where the major growth is going to be for them. If they had waited, say another six months to buy, it would have been a much more expensive exercise," he told Business Times.
CIMB Niaga announced last month that its first quarter net profit doubled to 524.2 billion rupiah (RM188 million) as it gave out more loans.
The new CIMB shares to be issued to Khazanah represent about 3.7 per cent of the group's issued and paid-up capital as at April 30.
CIMB's shares, which were suspended yesterday afternoon ahead of the announcement, earlier fell 0.6 per cent to RM14.40.
CIMB Niaga eased 2.9 per cent to 1,020 rupiah (RM0.37) on the Indonesian bourse.
If successful, its shareholding in Bank CIMB Niaga will increase to 97.9 per cent from 78.3 per cent at present.
CIMB announced in a stock exchange filing yesterday that it would buy about 17 per cent of the lender from Khazanah Nasional Bhd for RM1.7 billion.
Khazanah, which is Malaysia's investment arm, has the option of selling to CIMB another 2.7 per cent stake for RM254 million if it wants to dispose of its entire holdings in CIMB Niaga.
As payment, CIMB will issue up to 134 million new shares to Khazanah priced at RM14.50 each.
Khazanah currently owns 28 per cent of CIMB.
"This deal increases our exposure to Indonesia and is consistent with our optimism about the market as a whole, and CIMB Niaga in particular. We expect it to be earnings-per-share accretive," CIMB group chief executive Datuk Seri Nazir Razak said in a press statement.
The transaction is expected to be completed in the final quarter of this year.
Analyst Keith Wee of OSK Research said it was a "logical and good move" for CIMB to raise its stake in the Indonesian bank now. The Indonesian economy grew 5.7 per cent in the first quarter, its fastest pace in more than a year.
"That's where the major growth is going to be for them. If they had waited, say another six months to buy, it would have been a much more expensive exercise," he told Business Times.
CIMB Niaga announced last month that its first quarter net profit doubled to 524.2 billion rupiah (RM188 million) as it gave out more loans.
The new CIMB shares to be issued to Khazanah represent about 3.7 per cent of the group's issued and paid-up capital as at April 30.
CIMB's shares, which were suspended yesterday afternoon ahead of the announcement, earlier fell 0.6 per cent to RM14.40.
CIMB Niaga eased 2.9 per cent to 1,020 rupiah (RM0.37) on the Indonesian bourse.
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