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Maybank buying Kim Eng for $1.3bn

Maybank move aims to up revenue sources after entering into Pak, Vietnam, & Indonesia
KUALA LUMPUR/ SINGAPORE: Maybank ,Malaysia’s largest lender by assets, is snapping up Singapore broker Kim Eng Holdings for $1.4 billion, in a move to strengthen its grip on the regional stock broking industry and diversify the lender’s source of overseas revenue. The acquisition comes as Southeast Asian markets are on a roll, with Thailand and Indonesia ranking as the best performing major markets in Asia last year, spurred by foreign fund inflows and robust economic growth.
“What Maybank wants to do is expand its stock broking operations, and it makes sense for it to acquire a company which provides immediate exposure,” Vincent Khoo, UOB Kay Hian’s head of research, said on Thursday.
Investment banking and stock broking are becoming increasingly important for Malaysian banks as stiffer domestic competition puts further pressure on net interest margins on its loans.
Two of the best performing Malaysian banks in 2010 were CIMB Group and RHB Capital, which were top deal-makers in terms of number and value respectively. Maybank and Kim Eng shares both rose nearly 3 per cent on Wednesday before trading was suspended on Thursday. Shares in Kim Eng, valued at about $1.3 billion, have risen more than 35 per cent since mid-December, when reports emerged of an impending stake sale. “This position will widen our investment banking scope and reach into Southeast Asian in line with our regional aspirations,” Maybank Chief Executive Abdul Wahid Omar told a news conference. Maybank, which was previously linked with another regional brokerage OSK Holdings, said it has no plans of further acquisitions in this business.

Maybank has offered to buy a 44.6 per cent stake in Kim Eng from a unit of Taiwan’s Yuanta Financial Holdings and the family that owns the Singapore broker for $3.10 per share, a premium of about 15 per cent to Wednesday’s closing price. The deal, jointly advised by Nomura and Maybank Investment Bank, is expected to broaden Maybank’s sources of overseas revenue following its entry into Pakistan, Vietnam and Indonesia to counter the impact of slowing growth in Malaysia’s increasingly crowded financial market. “The Kim Eng acquisition would add about 5 per cent to Maybank’s bottom-line, but it will depend on how the deal is funded. If by debt, the first year’s contribution will be zero,” HwangDBS Vickersbanking analyst Lim Sue Lin said.-Agencies


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