BIMB Plans $885 Million Buyout of Malaysian Islamic Bank

BIMB Holdings Bhd. offered $885 million to buy a 49 percent stake in Bank Islam Malaysia Bhd. from its partners as it seeks full control over the Southeast Asian nation’s oldest Shariah-compliant lender.

It will pay $550 million for Dubai Financial Group LLC’s 30.5 percent stake and $334.6 million for the 18.5 percent held by Lembaga Tabung Haji, a Malaysian pilgrimage fund, the company said today in a Kuala Lumpur stock exchange filing. BIMB shares rose the most in a month after the announcement.

The deals, funded through a rights issue and Islamic bond sale, will boost BIMB’s profitability and help implement more “coherent” group-wide strategies, Kuala Lumpur-based BIMB said in the statement. The increased stake would give BIMB a larger share of global Islamic financial assets, which are forecast to double to $3 trillion by 2015, according to Standard and Poor’s.

Shares of BIMB closed 2.5 percent higher today at 4.12 ringgit in Kuala Lumpur, the biggest gain since July 3. Malaysia’s benchmark index was 0.3 percent higher.

Bank Islam, BIMB’s largest holding, was established in 1983 and offers financial services that comply with the religion’s ban on interest. It now has a network of 130 branches and more than 1,000 automated teller machines around Malaysia, according to the bank’s website.

BIMB will raise about 1.54 billion ringgit ($475 million) from the sale of rights shares with free detachable warrants and as much as 1.47 billion ringgit from the planned sale of 10-year Islamic bonds, the filing shows.

BIMB will sell two rights shares and two warrants for every five existing shares held at price of 3.60 ringgit apiece, it said. The transactions are expected to be completed by the fourth quarter this year, the company said.

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