Maybank, CIMB tussle for RHB?

PETALING JAYA: Malayan Banking Bhd (Maybank) and CIMB Bank Bhd could be drawn into a battle to take over RHB Capital Bhd, analysts and observers speculated. RHB's second largest shareholder Abu Dhabi Commercial Bank (ADCB) had in early April said that it had hired an investment bank to help it deal with its 25% stake in the bank. However, as has been reported, that move has led to the possibility of a proposed acquisition of RHB. RHB's
single largest shareholder is pension fund, the Employees Provident
Fund (EPF), which is not averse to swapping or paring down its 45% stake
in RHB over the long run, “if valuations are compelling,” as one source
explained. [You must be registered and logged in to see this image.]
The front-runners now for RHB's acquisition are Maybank and CIMB, industry observers speculated. “At stake is pole position. If CIMB puts in a bid for RHB, will Maybank, under (the stewardship of) Datuk Seri Abdul Wahid Omar just sit back and be relegated to number two?” posed a source close to the deal. Although
first round bids for ADCB's stake is due today, there is nothing to
stop a party or a bank from making a bid for the whole of RHB, said
another source. At the sidelines of the prospectus launch of UOB Development Bhd yesterday, CIMB's chief executive Datuk Seri Nazir Razak
was queried on his bank's interest in RHB. When asked specifically on
whether CIMB was considering acquiring ADCB's stake in RHB, Nazir
clearly said, “No, CIMB would not be bidding for that stake”. But
he did say this: “We are not looking at any specific deals in Malaysia
at this moment in time. We are busy at the moment and not looking at
particular deals at this point of time but that can change tomorrow.” The question is ... is that “tomorrow” coming soon? Early
last month, Nazir had reiterated his banking group's regional ambitions
of growing its market capitalisation to RM100bil from RM61.3bil by 2015
from mergers and acquisitions. He also said the CIMB group aimed
to be a top three bank in South-East Asia by market capitalisation and
asset size and is also targeting to be in the top three for return on
equity among Asean banks. It is currently ranked fifth in South-East
Asia in terms of size. “Although CIMB has been looking more at
regional M&As, the RHB situation has presented itself. Good banks
are hard to come by. Nazir is likely to be keen. So too would be Wahid,”
said a banking source. [You must be registered and logged in to see this image.]
It
is speculated that both CIMB and Maybank may be inclined to offer to
buy out RHB via a share swap with a cash option. The share swap could be
attractive to RHB's two largest shareholders, EPF and ADCB, who could
end up with, albeit smaller stakes, but in the country's largest banking
group with significant regional exposure and ambitions. The cash option
could be attractive to minority shareholders of RHB who may exit at a
decent premium. Interestingly, all three banks concerned are ultimately controlled by government-linked entities, CIMB by Khazanah Nasional Bhd, Maybank by Permodalan Nasional Bhd (PNB) and RHB by EPF. This
fact has fed even more to the speculation. “Considering the
shareholding structure of the three, could there be some kind of
understanding reached for an agreed M&A exercise which could achieve
the greater goals of banking consolidation and the creation of a larger
group poised for regional growth?” posed an industry player, who drew
parallels with Synergy Drive, the name given to the 2007 mega-merger of
plantation companies mostly owned by PNB. Maybank remains the
country's largest bank with assets amounting to RM357.6bil as at
end-2010, with CIMB following closely with assets of RM269.4bil. Meanwhile Reuters reported yesterday that Japan's Sumitomo Mitsui Financial Group and US private equity firm Carlyle were among “leading contenders” for ADCB's 25% stake in RHB. Reuters
also reported on Tuesday that another private equity firm TPG, which
was supposedly partnering Carlyle for ADCB's RHB stake, had pulled out
of the bidding. StarBiz had earlier reported that the central
bank would be disinclined to consider private equity firms as major
shareholders in banks in Malaysia, in the wake of Primus Pacific
Partners' debacle in EON Bank.