KUALA LUMPUR: PM Securities Sdn Bhd is still interested in obtaining an investment banking (IB) licence, and is looking for the right strategic partner to complement its business.
“PM Securities is still interested in obtaining an IB licence, provided we have a strategic partner. We are looking for a strategic partner with a regional network that would be able to complement and add value to our business,” said PM Securities chief executive officer Richard Khoo.
He said teaming up with a strategic partner was pivotal so that it could obtain a wider market reach and offer a wider range of products.
PM Securities is 99.99%-owned by Pan Malaysia Capital Bhd (PMCap), which is a member of the MUI Group controlled by tycoon Tan Sri Khoo Kay Peng.
PM Securities was one of the local universal brokers (UBs) which applied for a merchant-banking licence when Bank Negara Malaysia (BNM) opened the application to UBs in 2006.
It was widely known that Khoo had always wanted to return to the domestic banking scene. Khoo once owned MUI Bank Bhd under the MUI group, before the banking arm was sold to Hong Leong Group, which led to the formation of the current Hong Leong Bank Bhd.
As an interested UB, PM Securities had paid an initial deposit of RM10 million as part-payment of a total contribution of RM52.5 million to the central bank. To qualify, PMS also needed RM500 million in its balance sheet within three years.
However, Richard Khoo told The Edge Financial Daily that PMS was “refused” the licence by Ministry of Finance (MoF) because PM Securities chose not to pursue the matter.
“Back in 2006, all UBs were offered a chance to apply for IB licences. Those who were interested had to deposit RM10 million to BNM, and within three years, we needed to raise RM500 million within our balance sheet.
“However, PM Securities chose not to pursue it because we preferred to have a strategic partner before obtaining an IB licence. At the end of the three years, BNM refunded our deposit and under the clause, MoF had to either approve or refuse to grant us the IB licence,” he said.
“The whole misconception that BNM rejected our application arose, because we quoted the sentence verbatim to the regulators. But in truth, we had chosen not to pursue it,” he said.
Richard Khoo added PM Securities assumed it was still “entitled” to the application as it had been following the various directives by the authorities over the past few years. “We are the last UB left in Malaysia, and to our understanding, the entitlement is still there,” he said.
“We have many years of experience in financial services, given our background. A partner with a regional network would definitely help us expand our businesses, and validate our application for an IB licence,” he said.
A number of foreign financial institutions has expressed interest in local stockbrokers recently, following the liberalisation of foreign ownership from 40% to 70% for local stockbrokers last year.
One of the recent talks was between Singapore-based Kim Eng Holdings Ltd and Inter-Pacific Securities Sdn Bhd (Inter-Pac). The former had wanted to acquire 70% equity stake in the local stockbroking firm owned by tycoon Tan Sri Vincent Tan.
According to sources, the deal was made in the form of cash plus a share swap, with a premium to be paid for the stockbroking licence. Industry observers had said the acquisition made sense as Malaysia was the only country left to complete Kim Eng’s regional presence.
However, the deal fell through two weeks later when Kim Eng announced that it had discontinued talks with Inter-Pac. No reasons were given.
Apart from that, speculation has been rife that Kim Eng had also approached ECM Libra Financial Group Bhd and PMS about establishing its presence here. When asked, Richard Khoo only said there had been a lot of interest from foreign financial institutions.
This article appeared in The Edge Financial Daily, September 24, 2010.