This article first appeared in The Edge Financial Daily on March 6, 2019

KUALA LUMPUR: 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 The Edge Financial Daily.

This sale of shares in RHB, Malaysia’s fourth-largest banking group, would trim Aabar’s stake to 9.99%.

The price for the placement, taken up by foreign and local funds, is said to be between RM5.43 and RM5.54 per share, a discount to RHB’s close of RM5.71 yesterday. This means Aabar would be selling the block of shares at between RM1.04 billion and RM1.06 billion.

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

Notably, RHB’s stock hit RM5.94 on Monday, 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 at the end of last month. For the year ended Dec 31, 2018 (FY18), RHB saw a record net profit of RM2.3 billion from RM12.69 billion in revenue.

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

In its 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, a healthy liquidity position and an adequate coverage for loan losses”.

Notably, as at end-December last year, RHB’s net asset per share was at RM5.82.

In August 2018, 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 — raising RM609.92 million.

Aabar’s recent sales of its shares in RHB have 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.

Take note that RHB in 2016 undertook a restructuring 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 the EPF with 1.63 billion shares or a 40.62% stake.