Thursday 28 Mar 2024
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KUALA LUMPUR: Not all existing shares that Aabar Investment PJS holds in RHB Capital Bhd (RHBCap) are entitled to the banking group’s current renounceable rights issue.

Only a 15% shareholding that Aabar holds in RHBCap is entitled to the rights issue instead of its entire 20.9% shareholding in the banking group, said Bank Negara Malaysia (BNM) in a letter issued to RHBCap.

In a filing with Bursa Malaysia yesterday, RHBCap said BNM had issued an order under Section 94(2) of the Financial Services Act 2013, stopping RHBCap from issuing more shares to Aabar in right of the shares, which are in excess of 15%.

In the letter issued to RHBCap on Monday, the central bank highlighted that the limit on shareholding imposed by BNM on Aabar is in respect of the initial approval granted by the minister of finance for the investment fund to acquire a 24.9% stake in RHBCap.

BNM also clarified that the imposition of the shareholding limit was not conducted in relation to the renounceable rights issue that RHBCap is undertaking.

The limitation on Aabar’s shareholding came as a surprise to analysts, most of whom were not aware of the restraint.

In a back-of-an-envelope calculation, Aabar’s shareholding would be diluted marginally to 20.07% from 21.09% currently, assuming that the Abu Dhabi-based fund subscribes to all its entitlements.

However, if Aabar decides not to participate in the cash call, its shareholding would be diluted to a 17.5% stake of the enlarged share capital of 3.106 billion.

Based on Aabar’s shareholding of 545.78 million shares, the Abu-Dhabi investment fund could only subscribe to 77.6 million shares under RHBCap’s one–for-five renounceable rights issue, instead of 109.1 million shares for its entire shareholding of 21.09%.

Shareholding dilution aside, Aabar will also lose out on the potential gain of the remaining 5.09% shareholding that is not entitled to the rights issue, which is priced at RM4.82 per share, at a rather steep discount of 24.5% to yesterday’s closing share price of RM6.38.

Aabar paid an expensive price of RM10.80 per share, representing 2.25 times book value, to take over its existing block of shares from its sister company Abu Dhabi Commercial Bank in 2011.

Last week, RHBCap announced to Bursa Malaysia that the group’s two substantial shareholders, the Employees Provident Fund (EPF) and OSK Holdings Bhd, had subscribed to their entitlements. The EPF is the single-largest shareholder of RHBCap with a 41.65% stake, while OSK has a 9.9% interest.

For the remaining 250.8 million shares or 48.45% of the rights issue, RHBCap said its investment bank, RHB Investment Bank, had entered into an underwriting agreement with several investment banks to underwrite that portion.

 

This article first appeared in digitaledge Daily, on September 18, 2015.

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