Malaysia’s Affin Starts Exclusive Talks for Hwang-DBS Assets

Affin Holdings Bhd. was picked ahead of larger competitor AMMB Holdings Bhd. to begin exclusive talks to buy most of Hwang-DBS (Malaysia) Bhd.’s investment banking assets after the death of its founder.

Affin, Malaysia’s smallest banking group by market value, plans to acquire all of Hwang-DBS’s investment banking, futures and fund management interests, according to exchange filings by both companies in Kuala Lumpur today. The statements didn’t cite a price, though two people familiar with the matter told Bloomberg News in June that both Affin and AMMB bid about 1 billion ringgit ($304 million).

“The deal will help Affin strengthen its presence in the capital markets,” said Ang Kok Heng, chief investment officer at Phillip Capital Management Sdn., where he helps manage $428 million in Kuala Lumpur. “While Affin won’t have a problem financing the transaction, fundraising via a rights issue or bond offering in the future cannot be discounted.”

Malaysia’s smaller banks and brokerages have been merging to fend off increased foreign competition after the central bank granted more licenses to lenders including Industrial & Commercial Bank of China Ltd. Last year, K&N Kenanga Holdings Bhd. acquired the investment banking and broking unit of ECM Libra Financial Group Bhd., while RHB Capital Bhd. bought OSK Holdings Bhd.’s investment bank.

Hwang-DBS jumped 11 percent to close at 4.09 ringgit, the steepest rise in seven months, after the announcement was made during the midday trading break. The stock has jumped 56 percent this year, the third-best performer on the Bursa Malaysia Finance Index.

Affin climbed 1.7 percent to 4.16 ringgit, its biggest gain since June 28, while AMMB climbed 0.1 percent to 7.44 ringgit.

Singapore-based DBS Group Holdings Ltd. controls about 28 percent of Hwang-DBS, while Hwang Enterprises owns 26.5 percent, data compiled by Bloomberg show. The company’s founder Hwang Sing Lue died in December last year.

Before it's here, it's on the Bloomberg Terminal.