Affin Bank plans special dividend after RM1.42b asset management unit stake sale

Affin Bank plans special dividend after RM1.42b asset management unit stake sale
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KUALA LUMPUR (May 25): Affin Bank Bhd intends to pay a special dividend to shareholders upon completion of its entire 63% stake sale in Affin Hwang Asset Management Bhd by Affin Bank's 100%-owned subsidiary Affin Hwang Investment Bank Bhd for RM1.42 billion to Starlight Asset Sdn Bhd.

"The divestment will result in a gain of RM1.063 billion for Affin Bank," Affin Bank president and group chief executive officer Datuk Wan Razly Abdullah Wan Ali said at a press conference on Wednesday (May 25) after Affin Bank's extraordinary general meeting (EGM) which was held virtually.

Wan Razly said Affin Bank shareholders during the EGM approved the sale by Affin Hwang Investment Bank of the latter's entire 63% stake comprising seven milion shares in Affin Hwang Asset Management.

He however said Affin Bank is unable, for now, to comment on the quantum of the special dividend, as the group has to allocate capital towards the financial services provider's future growth.

According to him, proceeds from the Affin Hwang Asset Management stake sale is intended to fund Affin Bank's core business of moneylending and finance Affin Bank's working capital needs.

The Securities Commission Malaysia's (SC) approval is still required for Affin Hwang Asset Management's stake sale following Affin Bank shareholders' consent for the transaction, according to Wan Razly.

"We do intend to reward shareholders for their support and the growth of our business plans going forward. We need shareholders’ approval for the divestment. After that, we will have to go to the SC for approval for the transaction, and then we need to complete the deal.

"We expect the deal to [be] completed sometime in July-September [2022], and once that deal is completed, we need to submit an application [for the special dividend] to Bank Negara Malaysia (BNM), because we are a financial institution," he said.

He said Affin Bank intends to pay its shareholders the special dividend before the end of 2022 after it obtains BNM's approval for the special dividend.

"Once we have BNM's approval, then we will announce to shareholders the special dividend. We told shareholders we intend to pay the [special dividend] before the end of the year," he said.

Affin Bank intiallly announced the Affin Hwang Asset Management stake sale on Jan 28, 2022.

In a Bursa Malaysia filing then, Affin Bank said the purchaser — Starlight Asset — was an investment holding company incorporated by funds managed by CVC Capital Partners.

Affin Bank said the RM1.42 billion selling price for the 63% stake in Affin Hwang Asset Management was based on the purchaser's offer for 100% equity interest in Affin Hwang Asset Management at an equity value of RM2.25 billion.

"The proposed divestment provides an avenue for Affin Bank to unlock and realise the value of its investment in Affin Hwang Asset Management at an attractive premium," Affin Bank said.

Affin Bank said its original date of investment in Affin Hwang Asset Management was April 7, 2014, when the seven million shares in Affin Hwang Asset Management were acquired for RM282.13 million from Hwang-DBS (M) Bhd and Tunku Datuk Seri Nadzaruddin Ibni Almarhum Tuanku Ja'afar.

On Wednesday (May 25, 2022), Affin Bank's share price closed down one sen or 0.46% to RM2.16, which gives the bank a market capitalisation of about RM4.58 billion.

Affin Bank has 2.12 billion outstanding shares, according to its latest annual report.

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Chong Jin Hun