KUALA LUMPUR (Jan 28): Affin Bank Bhd’s share price dropped 17 sen or 8.67% to close at RM1.79 on Friday (Jan 28), following its confirmation in the afternoon that it is selling its entire 68.35% stake in Affin Hwang Asset Management Bhd to CVC Capital Partners, for a cash consideration of RM1.54 billion.
The stock, which opened at RM2 in the morning and dropped to as low as RM1.78, was the third biggest loser of the day across the bourse, though it only saw some 7.5 million shares traded. Its latest share price gives it a market capitalisation of RM3.8 billion.
The banking group's share price has been on the rise since a couple of days before Christmas last year, with the climb accelerating after the first week of January, to close as high as RM1.97 on Thursday, its highest in over two years.
In a statement Friday Affin Bank said its subsidiary Affin Hwang Investment Bank Bhd, together with some key management shareholders of Affin Hwang AM, had signed a conditional share purchase agreement with Starlight Asset Sdn Bhd — an investment holding company incorporated by funds managed by CVC Capital Partners — for the stake sale.
The sale values Affin Hwang AM at RM2.25 billion based on a 100% equity interest, according to a statement by Affin Bank.
“The group will recognise profit from divestment of RM1.07 billion for the sale of its 63% stake in [Affin Hwang AM] to CVC.
“The disposal will allow the group to realise a premium based on the consideration, which represents a historical price to AUM [asset under management] and PE [price-earnings] multiple of 3.1% and 19.7 times respectively, based on [Affin Hwang AM’s] audited financial statements for the financial year ended Dec 31, 2020 [FY20],” it said.
The bank plans to use gains from the disposal — which is expected to be completed in the third quarter of this year, subject to shareholders and regulatory approvals — for working capital to expand its core banking business.
Affin Bank president and group chief executive officer Datuk Wan Razly Abdullah Wan Ali said the disposal is in line with the bank’s plans to focus and grow its banking business and expand its loan portfolio, "which it can leverage 10 times from the gains of the divestment".
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