RHB Capital’s Biggest Investor Said to Mull Buying Rest

RHB Capital Bhd.’s biggest shareholder, the Employees Provident Fund, is considering buying the rest of the $6.6 billion Malaysian lender, a person with knowledge of the matter said.

Malaysia’s largest pension fund is working with Goldman Sachs Group Inc. to study options for Kuala Lumpur-based RHB Capital, said the person, who asked not to be named as the deliberations are private. EPF Chief Executive Officer Shahril Ridza Ridzuan said the fund isn’t “currently” planning a buyout of RHB Capital.

EPF held a 41 percent stake in the lender as of November, data compiled by Bloomberg show. RHB Capital has advanced 12 percent in local trading this year, giving it a market capitalization of 21.5 billion ringgit ($6.7 billion). The lender, which last year agreed to pay $620 million for OSK Investment Bank Bhd., trails its biggest Malaysian competitors in return on equity, according to data compiled by Bloomberg.

“This is a tactical move on the part of the EPF following the merger with OSK,” said James Lau, chief investment officer at Pheim Asset Management Sdn. “It has become a different animal and there are a lot of things that have to be reshuffled within the whole group. A lot of these things are best done outside the purview of shareholders.”

EPF may seek to restructure RHB Capital and take it public again later, the person familiar with the matter said.

Aabar Holding

“We don’t currently plan to do a privatization of RHB Capital,” Shahril said in a text message response to questions today. “Anything is possible in the future. We get proposals all the time, but very few of them end up being considered seriously.”

RHB Capital Managing Director Kellee Kam said by phone he wasn’t aware of a possible acquisition by EPF. Edward Naylor, a spokesman for Goldman Sachs in Hong Kong, declined to comment yesterday.

The pension fund would need to pay about 8.8 billion ringgit to take RHB private based on its closing price yesterday, HwangDBS Vickers Research Sdn. said today.

Shares of RHB Capital fell 1.1 percent to 8.51 ringgit today in Kuala Lumpur after earlier rising 0.7 percent. The benchmark FTSE Bursa Malaysia KLCI Index declined 0.4 percent.

Lower Return

Aabar Investments PJSC is RHB’s second-largest shareholder with a 21.9 percent stake, according to data compiled by Bloomberg. OSK owns 9.8 percent, the data show. Aabar acquired 24.9 percent of RHB in June 2011 for 10.80 ringgit apiece from Abu Dhabi Commercial Bank PJSC.

RHB Capital’s return on equity of 12.4 percent is below the average 15.1 percent among nine publicly traded Malaysian lenders, data compiled by Bloomberg show.

RHB bought OSK Investment Bank as bigger local rivals Malayan Banking Bhd. and CIMB Group Holdings Bhd. benefited from a surge in mergers and stock sales in Southeast Asia, a region spanning the Philippines to Thailand. The two banks added headcount and acquired competitors with the ambition of creating regional investment-banking units able to compete in Asia with global firms including Goldman Sachs and Morgan Stanley.

The value of mergers involving companies in Southeast Asia swelled to about $128 billion last year, close to the record $137.1 billion reached in 2007, data compiled by Bloomberg show. Sales of domestic bonds jumped 33 percent to a record $80 billion from the previous high of about $60 billion set in 2011.

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