This article first appeared in The Edge Financial Daily on January 12, 2018

KUALA LUMPUR: CIMB Group Holdings Bhd is planning to divest 20% of its stake in CIMB-Principal Asset Management Bhd (CPAM) to Principal International Asia Ltd and 10% of its stake in CIMB-Principal Islamic Asset Management Sdn Bhd to Principal Financial Services Inc.

The stakes will be sold for a total consideration of RM470.29 million, leading to a revaluation gain on disposal of approximately RM950 million, CIMB said in a filing with Bursa Malaysia yesterday.

The disposal will leave CIMB with a 40% ownership in both its asset management units, which will continue to be managed on a joint-venture basis by both CIMB and the Principal Financial Group.

“This shareholding realignment will ensure that our asset management joint venture achieves its maximum potential and continues to be value-accretive to CIMB,” said Tengku Datuk Seri Zafrul Aziz, CIMB group chief executive officer.

The transaction is expected to be completed in the second quarter of 2018 and is subject to the relevant regulatory approvals.

Tengku Zafrul added that it would also allow CIMB to “realise attractive gains” from its strategic investment. CIMB and Principal Financial have been regional partners since 2004, growing their operations across Malaysia, Singapore, Indonesia and Thailand.

The CIMB-Principal Asset Management group of companies has more than RM70 billion in assets under management, and is one of the largest asset managers in the region.

“This exercise will also see our common equity Tier 1 ratio improve by approximately 18 basis points,” CIMB added in a statement yesterday.

Now that the group’s stake in CPAM has fallen from 60% to 40%, it is no longer a subsidiary of the group.

CIMB’s share price has been on a  steady climb, bouncing back from a low of RM5.95 in mid-December last year to a high of RM6.82 on Monday. It closed at RM6.75 yesterday, with a market capitalisation of RM62.27 billion.