Only AMMB and Affin in race for Hwang-DBS

Only AMMB and Affin in race for Hwang-DBS
Business & Markets 2013
Written by Joyce Goh of theedgemalaysia.com
Friday, 15 March 2013 08:46


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PETALING JAYA: AMMB HOLDINGS BHD [] and AFFIN HOLDINGS BHD []are the two banking groups left in the race for HWANG-DBS (M) BHD [], according to executives familiar with the deal.

“They have submitted their requests to Bank Negara Malaysia to start negotiations for the acquisition of Hwang-DBS. Both K&N Kenanga Holdings Bhd and ALLIANCE FINANCIAL GROUP BHD [] are no longer in the running,” said an executive.

“The bids from the four banks ranged from RM1.3 billion to RM1.6 billion,” he said, adding that foreign banks did not submit any bids in the end although they had initially expressed their interest.

A price tag of RM1.6 billion will value Hwang-DBS at about 1.6 times price-to-book value (P/BV) based on its RM961 million book value as at Oct 31, 2012. A RM1.3 billion price tag, meanwhile, values the asset at 1.35 times P/BV.

The earlier acquisition by K&N Kenanga of the investment banking and broking unit of ECM Libra Financial Group Bhd for RM875 million was valued at 1.3 times book.
RHB CAPITAL BHD []’s acquisition of OSK HOLDINGS BHD []’s investment bank for RM2 billion was even higher at 1.77 times book.

Analysts said Hwang-DBS would fetch a higher price than the 1.3 times P/BV paid by ECM Libra, in view of Hwang-DBS having a relatively large asset management business.

Hwang-DBS, the country’s third largest stockbroker, with 650 remisiers, had RM18.1 billion worth of assets under its management as at Oct 31, 2012.

The group’s investment bank — HwangDBS Investment Bank Bhd — is one of two stand alone investment banks in the country following a consolidation of the industry.
“Hwang-DBS will propel AMMB or Affin to a prominent position in the asset management and stockbroking industry,” said a banking analyst.

According to Bursa Malaysia, AMMB will jump to pole position in terms of value and volume for brokerage from its current fifth ranking if it succeeds in acquiring Hwang-DBS.
Affin, on the other hand, will leapfrog to the third position from its current 14th ranking.

As at the first quarter ended Oct 31, 2012, Hwang-DBS’ revenue increased 36% to RM113.41 million, while net profit fell 25% to RM11.48 million.

The largest shareholders of Hwang-DBS are DBS Bank Ltd of Singapore with a 27.7% stake, followed by Hwang Enterprise Sdn Bhd with 26.52%.

more likely AMMB , keep watch AMMB cause it will make it the largest bank