Hong Leong scouts for banks and brokerages

by **hlk** Sat 09 Jul 2011, 09:48

KUALA LUMPUR: Hong Leong Financial Group Bhd, the banking and insurance group controlled by billionaire Quek Leng Chan, is seeking acquisitions in emerging markets as it aims to triple its assets and profits in five years.

The group, which has a 20% stake in China’s Bank of Chengdu Co and a banking licence in Vietnam, is looking for targets in countries including Thailand and Indonesia, chief executive officer Raymond Choong said in an interview on Thursday. It may also buy local brokerages, he said.

“The global market is now a borderless world,” Choong said. “Being very successful in Malaysia doesn’t make you an important player. China, Vietnam, Thailand and Indonesia are markets with high potential where we excel.”

Hong Leong is expanding abroad as competition increases in its domestic market with the central bank granting more licences to international lenders including Bank of China Ltd. Its banking unit, Hong Leong Bank Bhd, completed a US$1.7bil takeover of domestic rival EON Capital Bhd in May, enabling it to overtake RHB Capital Bhd as the nation’s fourth-biggest bank.

Hong Leong Financial shares have climbed 52% this year, and Hong Leong Bank rose 50%, making them the biggest gainers on the benchmark FTSE Bursa Malaysia KLCI Index. Hong Leong Financial shares were little-changed as at 4.41pm in yesterday’s trading.

Quek, 70, is Malaysia’s fourth-richest man with a net worth of US$4.8bil, according to a Forbes magazine calculation as of March. The billionaire, who inherited part of his fortune from his father, also controlled Hong Kong-listed investment company Guoco Group Ltd and had stakes in hotels and property across South-East Asia, Forbes said on its website.

“It is known for not overpaying for acquisitions,” David Chong, an analyst at RHB Research Institute Sdn, said by phone in Kuala Lumpur yesterday. “I’m not too sure if there are many banks out there that they can find on the cheap. The economy is now in an up-cycle and banking groups are making good money. Nobody wants to sell cheap.”

Choong said the acquisition of EON Capital would give Hong Leong Bank the financial scale to compete with Malayan Banking Bhd, CIMB Group Holdings Bhd and RHB Capital Bhd - the country’s top three lenders. “Scale is very important in this business. This will really allow us to leapfrog ahead. I don’t believe being a small niche player in this market will allow you to compete effectively.” — Bloomberg