By Jose Barrock
Affin Holdings Bhd made the highest offer for Hwang DBS (M) Bhd, in a non-binding bid that closed mid last week, industry sources say.
The lowest bid meanwhile is understood to have come from Alliance Financial Group Bhd, while K&N Kenanga Holdings Bhd and AMMB Holdings Bhd are neck-and-neck behind Affin.
While certain foreign parties had expressed interest, none are understood to have submitted bids, the source added.
“I’m not surprised they (Affin) put in the highest bid, they have to do something now after previous M&A (mergers and acquisition) attempts were thwarted by Bank Negara…in our case we have to make the acquisition work for us, (so) we can’t fork out so much,” one of the bidders said to KiniBiz.
Hwang Lip Teik
The non-binding bids were made to Goldman Sachs Group Inc, which was given the mandate to find a buyer for Hwang DBS, after the founder and substantial shareholder of the merchant banking outfit, Hwang Sing Liu passed away in mid-December last year. Sing Liu’s son, Hwang Lip Teik is now the chairman of Hwang DBS.
Goldman Sachs could narrow down the bids or seek permission on behalf of Hwang DBS to Bank Negara, to commence negotiations with all four, the source added.
The substantial shareholders of Hwang DBS are the Hwang family with 30.82 per cent and the Singapore government’s investment arm Temasek Holdings (Pvt) Ltd largely via DBS Vickers Securities (M) Pte Ltd with 27.67 per cent.
Affin has been on the lookout for mergers and acquisitions for the past few years.
In May 2010, Affin had requested to Bank Negara to commence negotiations to take over EON Capital, which owned EON Bank Bhd. Affin was reported to have offered RM7.50 a share, 30 sen higher than the winning bidder, Hong Leong Bank Bhd’s RM7.20 a share, but Bank Negara had stymied the deal and did not give Affin the green light to commence talks.
It is not clear how Bank Negara views this bid by Affin for Hwang DBS.
Affin had started negotiations with Khazanah Nasional Bhd and DRB Hicom Bhd to buy into Bank Muamalat Bhd last August, after getting approvals from Bank Negara. Talks are on-going with an extended deadline of March 31 deadline to complete the talks.
Talks between Affin, DRB and Khazanah had commenced in mid-August last year and were supposed to have concluded late last year.
Although Affin in an analysts briefing last week had said that it had made an offer for a stake in Bank Muamalat, some market watchers view the three month extension as a sign that talks between the parties have not been going well.
Affin had recently dropped plans to purchase Bank Ina Perdana in Indonesia, as a result of a 40 per cent shareholding cap imposed by the Indonesian government which would limit Affin’s control over the Indonesian bank.
The substantial shareholders at Affin are Lembaga Tabung Angkatan Tentera with about 55 per cent shareholding, Hong Kong’s Bank of East Asia Ltd with 23.5 per cent and the Employees Provident Fund (EPF) with about seven per cent.
Initially many were wondering if K&N Kenanga’s bid was serious as it had just swallowed ECM Libra Investment Bank for RM875 million, late last year. Sources however indicate that the group has put in a good bid.
Kenanga’s substantial shareholders are Cahya Mata Sarawak with 25.07 per cent, Deutsche Asia Pacific Holdings Pte Ltd, a unit of Deutsche Bank controlling 16.55 per cent and Tengku Noor Zakiah Tengku Ismail controlling 16.5 per cent.
Last week KiniBiz had reported that AMMB may be looking at throwing its hat in the ring, to compete with the other three. AMMB is understood to have joined in the fray for Hwang DBS.
AMMB has Australia New Zealand Banking Group Ltd as the largest shareholder controlling 23.78 per cent, Azman Hashim, the founder of AMMB with 16.78 per cent in the banking group, and Prudential plc controlling 6.68 per cent.
Initially many were speculating that Alliance Financial Group would be the one to beat, as it is also a Temasek linked company.
Via Vertical Theme Sdn Bhd, Temasek has 29.06 per cent in Alliance Financial Group.
Daim Zainuddin
Other shareholders of privately held Vertical Theme include Langkah Bahagia Sdn Bhd, a company where former Finance Minister Daim Zainuddin is said to have a stake.
Lutfiah Ismail a shareholder of Langkah Bahagia is known to be a close associate of Daim’s.
However Daim has consistently denied having anything in Alliance Financial Group.
For its first financial quarter ended October 2012, Hwang DBS posted a pre-tax profit of RM16.04 million on the back of RM113.41 million in sales. Earnings per share or EPS for quarter in review, was 3.61 sen.
Hwang DBS’ net operating cash flow for the three months ended October last year was RM231.13 million.
The merchant banking group’s net asset per share as at end October stood at RM3.67. Hwang DBS’ stock has been on an upward trend and closed at RM3.87 last Friday, after gaining about 60 per cent since end January this year.
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