KUALA LUMPUR (March 5): United Arab Emirates-based Aabar Investments PJS is placing out about 191 million shares or 4.76% of its 14.75% stake in RHB Bank Bhd, sources familiar with the matter told theedgemarkets.com.
     
This sale of shares in RHB, Malaysia’s fourth largest banking group, would trim Aabar’s stake down to 9.99%.

The price range for the placement which was being taken up by both foreign and local funds is understood to be between RM5.43 and RM5.54 per share, which was a discount to RHB’s close of RM5.71 yesterday. This would mean that Aabar would be selling the block of shares for anywhere between RM1.04 billion and RM1.06 billion.

“I hear most of the placements were done at the lower end of price range,” the source said.

It is noteworthy that RHB’s stock hit RM5.94 on March 4, its highest since September 2014, and has gained more than 10% since mid-December last year.

Much of the enthusiasm has been due to the perception of very good results, announced end of last month. For its year ended Dec 31, 2018 (FY18), RHB registered record net profits of RM2.3 billion, from RM12.69 billion in revenue.

RHB chalked up an earnings per share (EPS) of 57.49 sen for the year just ended, in contrast to 48.63 sen in FY17. In contrast to FY17, RHB’s net profit was up by 18%, while revenue strengthened by 6.1%.

In notes accompanying its financials, RHB said, “We are pleased to have delivered a good performance in 2018, improving our ROE (return on equity) in excess of 10%. Our fundamentals are strong with high capital ratios, healthy liquidity position and adequate coverage for loan losses.”

It is noteworthy that as at end December last year, RHB’s net assets per share was RM5.82.

In August last year, Aabar placed out 120.3 million shares or 3% in RHB, at RM5.07 a share — the lower end of its range of RM5.07 to RM5.18 — and raised RM609.92 million.

Aabar’s recent sale of its shares in RHB has been at a huge discount to its entry in June 2011, when it acquired a 24.9% block in RHB at RM10.80 a share, or for RM5.89 billion. However, the acquisition in 2011 was from Abu Dhabi Commercial Bank (ADCB), a sister company, and largely considered a left-hand-to-right-hand transfer.

Nevertheless, the sale was at 2.25 times RHB’s book value.

ADCB acquired 25% in RHB Capital Bhd in 2008 for RM3.87 billion or RM7.20 a share — at a nearly 38% premium — from the Employees Provident Fund (EPF) in 2008.

Aabar is a unit of Abu Dhabi sovereign fund Mubadala Investment Co.

Note that RHB in 2016 had undertaken a restructuring exercise involving a rights issue, and RHB Bank Bhd assuming the listing status of RHB Capital, with each RHB Capital share converted into 1.3 RHB shares. Aabar, which did not participate in the rights issue, saw its shareholding diluted to 17.75%.

RHB’s largest shareholder is EPF, with 1.63 billion shares or a 40.62% stake.