Hong Leong Capital Bhd., a unit of the Malaysian insurance and banking group controlled by billionaire Quek Leng Chan, surged the most in more than 14 years after receiving a buyout offer from its parent.
Hong Leong Capital, which holds the group’s investment banking assets, jumped 25 percent close at 1.78 ringgit in Kuala Lumpur today, the biggest gain since September 1998. The stock was the day’s biggest gainer on the Bursa Malaysia Finance Index.
Hong Leong Financial Group Bhd., which already owns 79.1 percent of Hong Leong Capital, offered 1.71 ringgit per share for the remaining stake it doesn’t already own, according to yesterday’s Kuala Lumpur stock exchange filing. That’s a 20 percent premium to its last traded price of 1.42 ringgit before the counter was halted on Jan. 11.
“This would be an opportunity for shareholders to cash out at a decent price,” Desmond Ch’ng, an analyst at Malayan Banking Bhd., wrote in a report today. “Hong Leong Capital has historically traded at a discount to book value given the lack of liquidity and interest.”
The proposal would streamline the Hong Leong group, cutting its listed financial units in Kuala Lumpur to two from three. Hong Leong Financial said it doesn’t plan to maintain Hong Leong Capital’s listing status.
The buyout should have a neutral financial impact on Hong Leong Financial, Ch’ng said, maintaining Maybank’s buy rating with a higher price target of 15.70 ringgit, compared with 15.60 ringgit previously.
Hong Leong Financial closed unchanged at 14.42 ringgit, while the benchmark FTSE Bursa Malaysia KLCI Index rose 0.1 percent. Hong Leong Bank Bhd., the group’s retail banking unit which isn’t involved in the transaction, was also unchanged at 14.98 ringgit.
Hong Leong Capital provides investment banking, stock and futures broking as well as fund-management services through its units Hong Leong Investment Bank Bhd. and Hong Leong Asset Management Bhd.