Affin Holdings Bhd. (AHB), Malaysia’s smallest banking group by market value, agreed to buy most of Hwang-DBS (Malaysia) Bhd.’s investment banking assets for 1.36 billion ringgit ($409 million) after the death of its founder.
Affin, controlled by the country’s armed-forces fund, will pay cash for assets including Hwang-DBS’s broking and fund management businesses, according to a statement in Kuala Lumpur today. It will later raise as much as 1.25 billion ringgit to finance the acquisition. This may include a rights issue, the lender said.
“We’ve acquired a big stockbroking business,” Maimoonah Hussain, managing director of Affin Investment Bank Bhd., told reporters in Kuala Lumpur today. The asset management business “has a very strong name in the market. We’ll synergize all these and expand our expertise in the equity capital market.”
Malaysia’s smaller banks and brokerages have been forging domestic mergers to stay competitive, while their bigger competitors, including Malayan Banking Bhd., have bought abroad in Southeast Asia to expand. K&N Kenanga Holdings Bhd. acquired the investment banking and broking unit of ECM Libra Financial Group Bhd. in 2012, while RHB Capital Bhd. (RHBC) bought OSK Holdings Bhd.’s investment bank the same year.
Affin shares have climbed 28 percent in the past one year, outpacing an 11 percent gain in the benchmark FTSE Bursa Malaysia KLCI Index. Hwang-DBS has surged 33 percent over the same period. Both stocks were halted today for the announcement.
Singapore-based DBS Group Holdings Ltd. (DBS) currently controls about 28 percent of Hwang-DBS, while Hwang Enterprises owns 26.5 percent, according to data compiled by Bloomberg. The company’s founder Hwang Sing Lue died in December 2012.
Affin wants to complete the acquisition by April and finalize the merger of Hwang-DBS’s operations by October, Maimoonah said.
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