KUALA LUMPUR (Jan 28): Affin Bank Bhd’s subsidiary Affin Hwang Investment Bank Bhd and selected key management shareholders of Affin Hwang Asset Management Bhd (Affin Hwang AM) have 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 sale of their entire 68.35% stake in the asset management company for a cash consideration of RM1.54 billion.
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.
Affin Bank added that the transaction is expected to enhance its Common Equity Tier 1 ratio by 289 basis points, based on its audited financials for FY20.
According to the bank, it will use the gains for working capital requirements to expand its core banking business.
“This transaction is expected to be completed in the third quarter of 2022 and is subject to shareholders approval of Affin Bank and relevant regulatory approvals,” it added.
The announcement confirms a report by The Edge on Thursday.
Besides Affin Hwang Investment Bank, which holds a 63% stake in the bank, other shareholders include Nikko Asset Management International Ltd (Nikko AM) with a 27% stake, followed by Affin Hwang AM managing director Datuk Teng Chee Wai with a 3.1% equity interest.
The remaining 6.9% is split between 13 shareholders whose stakes range from 0.3% to 1.15%.
The statement did not specifically identify the shareholders who are involved in the transaction.
“This disposal is very much in line with our plans to focus and grow our banking business and expand our loan portfolio which we can leverage 10 times from the gains of the divestment. Our enhanced capital ratios will put us in a strong position to implement our long-term business plan and catapult the group’s position for our A25 Plan to achieve total loans and financing of RM90 billion by end 2025. As at Sept 30, 2021, our total loans and financing stood at RM49 billion,” said Affin Bank president and group chief executive officer Datuk Wan Razly Abdullah Wan Ali.
He added that Teng will continue to lead Affin Hwang AM, while Nikko AM will maintain its institutional shareholding presence.
“... we believe that the business of [Affin Hwang AM] will continue to perform well moving forward and are confident that CVC, [Affin Hwang AM's] management together with Nikko AM are committed to support [Affin Hwang AM’s] growth, its superior long-term commitment to deliver value to clients and further develop its talented employees.
“We are pleased to see the entry of CVC, a global private equity player, into a home-grown asset management house which is testament to the confidence in the growth prospects of the financial services sector and the Malaysian economy,” he concluded.
At noon break, Affin Bank was down 11 sen or 5.61% to RM1.85, giving it a market capitalisation of RM3.93 billion.