Dr Yu nets RM32m from HLCap

by **Cals** Thu 21 Aug 2014, 12:54

Business & Markets 2014

Written by Cindy Yeap of theedgemalaysia.com

Thursday, 21 August 2014 09:50

KUALA LUMPUR: Datuk Dr Yu Kuan Chon — who singlehandedly denied Tan Sri Quek Leng Chan’s Hong Leong Financial Group Bhd (HLFG) from privatising Hong Leong Capital Bhd (HLCap) cheaply in February 2013 — raised RM32 million from selling just over 1% of HLCap in the past three days.
Dr Yu sold 2.57 million HLCap shares between Aug 15 and 19, cutting his stake by 1.04% to 7.22% as at Aug 19, stock market filings dated Aug 20 showed.
The filings did not disclose the selling price for the shares which Dr Yu sold ahead of the Aug 31 “extended deadline”, after which Bursa Malaysia may decide to suspend trading of HLCap for falling short of its 25% public shareholding spread requirement.
Still, it is likely that Dr Yu sold the 2.57 million HLCap shares for RM31.93 million or an average of RM12.45 apiece. Stock market data showed 2.57 million shares changed hands in six blocks off-market for prices between RM12 and RM12.80 apiece on the same days Dr Yu sold his shares.
Some of the shares Dr Yu sold in the three days were above open market prices. While no buyers were disclosed at press time, it is likely that parties aligned to HLFG are the buyers of the stake. HLFG owned over 81.3% of HLCap at the close of its privatisation offer on Feb 25 last year.
To put the RM32 million Dr Yu raised from selling the 2.57 million shares into perspective, Dr Yu would have only received RM4.39 million for those shares if he had accepted HLFG’s takeover offer of RM1.71 apiece in February last year. In fact, the amount Dr Yu raised from selling those shares is more than 80% of the RM38 million he would have received for his entire 8.96% stake in HLCap if he had accepted the RM1.71 price tag. At his peak, Dr Yu had 22.19 million HLCap shares as at March 4, 2013, which works out to a 8.99% stake.
Given that HLCap shares traded at an average of RM2 apiece during the period Dr Yu raised his holdings in HLCap, it is estimated that Dr Yu bagged a profit of RM10 apiece or some RM25 million from selling just those 2.57 million shares alone. Dr Yu, who is chairman of YNH Property Bhd, still has 17.83 million HLCap shares as at Aug 19.
Before the transactions this month, Dr Yu last sold HLCap shares on June 16 this year to help keep HLCap’s public shareholding spread above the 10% threshold required for active trading. For this reason, Dr Yu had periodically sold about 1.8 million shares between March 4, 2013 and June 16 this year. As at July 31, 2014, HLCap’s public shareholding spread was 10.24%.
Closing at RM12.68 yesterday, HLCap had lost 13.15% from its recent high of RM14.60 on June 17. Hong Leong Investment Bank Bhd chief executive officer Lee Jim Leng has been selling her HLCap shares at prices above RM12 apiece this month.
If Bursa chooses to suspend HLCap shares after Aug 31, a notice of five market days will be given. This is why investors have been advised “to trade [HLCap] with caution”.

This article first appeared in The Edge Financial Daily, on August 21, 2014.