Scramble for advisory roles as $7 billion Malaysian deal brews

HONG KONG Thu Jun 2, 2011 10:24am EDT

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HONG KONG (Reuters) - The Malaysian capital of Kuala Lumpur is shaping up as a hot, if somewhat unlikely, deal-making destination this summer, with investment bankers jostling for at least four plum advisory roles.

What started as a $1.6 billion auction of Abu Dhabi Commercial Bank's ADCB.AD stake in RHB Capital RHCB.KL has exploded into a $7 billion bank takeover in Malaysia.

Large bank acquisitions are few and far between in this part of the world due to ownership restrictions in several markets, making the latest Malaysia deal a huge fee-grab opportunity that investment banks don't want to miss.

"Certainly, if this goes that direction then there are a number of potential roles up for grabs," one source familiar with the matter said.

CIMB (CIMB.KL) and Maybank's (MBBM.KL) decision to explore competing takeovers of RHB has kicked off a round of guessing game on who will win what role in what could be Asia's fifth-biggest banking deal ever.

Both CIMB and Maybank have in-house M&A advisory teams, but both are likely to appoint outsider advisers considering the size of the deal.

Bankers estimate the deal will generate around $60 million in advisory fees to be split between the deal makers, plus some financing fees if the successful bidder uses debt to fund the acquisition.

Also at stake is the league table credit associated with a transaction of this size.

On top of an earlier, $1.7 billion deal for Hong Leong Bank (HLBB.KL) to buy EON Capital EONP.KL, Malaysia is drawing plenty of attention from FIG bankers who typically pay more attention to Greater China, Singapore and India.

Southeast Asia has already recorded $47.2 billion in M&A deals so far this year, a third more than the same period last year.

Malaysian pension fund EPF, RHB's biggest shareholder, holds the key in this battle and bankers say it's likely to appoint an independent adviser. But the expectations is that EPF is unlikely to pay huge fees.

The most coveted role is to get the mandate from the target RHB and there will be strong line-up for this role, they said.

"You would want to be on RHB's side given the high probability of a deal getting done," a banker who advises on financial institution deals said. Given the higher certainty, RHB is expected to pay less, the source said.

Already, there is talk that Nomura Holdings Inc (8604.T) is close to winning the mandate from Maybank since the Japanese brokerage had advised Maybank on its $1.4 billion acquisition of Singapore broker Kim Eng. Nomura declined to comment.

BofA Merrill Lynch (BAC.N) and Goldman Sachs (GS.N) are advising Abu Dhabi, Deutsche Bank (DBKGn.DE) is backing Japan's Sumitomo Mitsui (8316.T) on its bid for Abu Dhabi's 25 percent stake.

That leaves, Citigroup (C.N), Credit Suisse (CSGN.VX), Morgan Stanley (MS.N), Rothschild and UBS (UBSN.VX) as banks that are not engaged and hence free to pitch for mandates from CIMB and EPF and RHB.

J.P. Morgan (JPM.N) has been working with a Carlyle Group CYL.UL led consortium for a potential bid for Abu Dhabi's stake. But given the latest interest from Maybank and CIMB, private equity funds have little interest in staying in the battle for RHB, some bankers have said. That may possibly free up J.P. Morgan.

Credit Suisse enjoys good relationship with EPF, which places the Swiss bank in a strong position to get a gig, banking sources said.

(Additional reporting by Saeed Azhar; Editing by Lincoln Feast)

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