KUALA LUMPUR, Sept 4 (Reuters) - Affin Holdings Bhd , Malaysia’s seventh-largest lender by assets, said on Wednesday it won the final round of bidding for the right to buy Hwang-DBS Malaysia Bhd’s key businesses, beating rival AMMB Holdings Bhd.
Banking sources said Affin’s offer values Hwang-DBS’ businesses at 1.3 times price-to-book value, or about 1.27 billion ringgit ($386.43 million) based on Hwang-DBS’ 977.4 million ringgit book value as of April 30, according to Reuters’ calculations.
That would be in line with the average 1.3 times value paid in past investment banking mergers and acquisitions involving Malaysian banks dating to the year 2000. Affin itself did not release any financial details of its offer.
The “exclusivity agreement” Affin announced it has entered into with Hwang-DBS brings Affin a step closer to becoming Malaysia’s third-largest stockbroker with a market share of more than 9 percent, just behind CIMB Investment Bank and K&N Kenanga Holdings Bhd.
This latest agreement also follows the recent tie-up between investment bank K&N Kenanga and ECM Libra Financial Group Bhd , which saw the merged entity become the biggest independent investment bank by sales and third-largest brokerage by trading value.
The recent consolidation in the sector comes as Malaysian authorities encourage bank mergers to create larger groups with the financial muscle to grab market share in Southeast Asia, whose ASEAN grouping plans to form a single economic zone by 2015.
The businesses that fall under the “exclusivity agreement” include 100 percent interest in Hwang-DBS Investment Bank Bhd and HDM Futures Sdn Bhd, 70 percent of Hwang Investment Management Bhd and 49 percent of Asian Islamic Investment Management Sdn Bhd, according to the stock exchange filing on Wednesday.
“Under the agreement, both parties will proceed to make their respective applications to Bank Negara Malaysia,” Affin said. Bank Negara is the country’s central bank.
Affin and AMMB, Malaysia’s sixth-largest lender by assets, were the final two bidders for Hwang-DBS businesses. Hwang-DBS, the country’s fourth-largest stockbroker by market share, manages more than 18.1 billion ringgit worth of assets.
Affin counts Malaysia’s armed forces fund Lembaga Tabung Angkatan Tentera as its largest shareholder.
Affin shares rose 0.24 percent prior to the announcement, while Hwang-DBS climbed 1.63 percent.
($1 = 3.2865 Malaysian ringgit)
Reporting By Yantoultra Ngui, Niluksi Koswanage and Al-Zaquan Amer Hamzah; Editing by Matt Driskill