Shareholders f RHB Capital Bhd will have to decide whether to accept or reject an offer to merge the banking group. Below are the two key players in RHB Cap that could make or break the deal for the creation of a mega bank arising from the merger between CIMB Group Holdings Bhd, RHB Cap and Malaysia Building Society Bhd.
AABAR INVESTMENTS PJSC
AABAR Investments, the Abu Dhabi sovereign wealth fund, will be one the key players which will be closely tracked by investors in view of the proposed merger.
As one of the major shareholders with a 21.43% stake in RHB Cap, Aabar Investments will have a big say on the proposal. The Employees Provident Fund (EPF), the largest shareholder in RHB Cap, has a 40.76% stake in the banking group.
Whether the Abu Dhabi sovereign wealth fund will stay on or attempt to scuttle the deal will depend on the price.
Industry observers and analysts say Aabar has not been active in the management of the banking group and in the last couple of years has been courting numerous suitors as it seeks to exit from its investment in RHB Cap. Sources expect the deal for the proposed merger to be done at between 1.7 and 1.75 times book value (based on CIMB’s current valuation of 1.7 times). That valuation will be an opportunity, according to some industry watchers, for Aabar to dispose of its stake in RHB Cap as the book value of RHB Cap has increased since it purchased its stake from its sister company Abu Dhabi Commercial Bank at 2.25 times book value.
Public Investment Bank Bhd head of research Ching Weng Jin feels Aabar could be a willing seller, considering the cumulative 58 sen dividend it has received from its point of investment and more so with a share swap deal which it could benefit from the price upside of the merged entity.
In 2008, ADCB acquired the 25% stake in RHB Capital at RM7.20 per share, a 26% premium over the latter’s market price of RM5.70 then.
TAN SRI ONG LEONG HUAT
THE low-profile tycoon and OSK Group supremo has been in the news of late. In April, at OSK Holdings Bhd’s AGM, Ong said he had “no immediate plans” to divest his stake in RHB Cap given that its value had appreciated.
Upon completion of the merger between RHB Cap and OSK Investment Bank last year, his stake (held through OSK Holdings) in RHB Cap is 9.91%.
Will Ong agree with the proposed merger when it comes time to vote. A fund manager who monitors OSK Holdings feels that Ong, as a business man, will most likely agree with the merger. “After the merger, his shareholding is likely to be further diluted and if the price is right he will make an exit,” he notes.
Ong is the chairman of RHB Investment Bank Bhd. Based on the last-traded price of RHB Cap of RM8.72, the bank is worth 1.29 times its book value. OSK’s stake in the bank is worth RM2.2bil, which translates to about RM2.27 per OSK share.
Ong emerged as a substantial shareholder in PJ Development Holdings Bhd last November and was subsequently appointed non-independent and non-executive chairman on Dec 23.
Following the divestment of OSK Investment Bank to RHB Cap, the seasoned stockbroker said OSK Holdings would focus on property, among others, to develop the land next to OSK Plaza. The development is expected to have a gross development value of RM1bil.
