KUALA LUMPUR (May 21): Kenanga Investment Bank Bhd has gotten the greenlight from Bank Negara Malaysia to commence negotiation to buyout Inter-Pacific Securities Sdn Bhd’s stockbroking business.

In a filing with Bursa Malaysia this evening, the banking group said it has received a letter from Bank Negara. The central bank states no objection for it to commence negotiations with Inter-Pacific Securities on the proposed acquisition of the latter’s assets, liabilities, and contractual arrangements.

Inter-Pacific Securities, an indirect subsidiary of Berjaya Capital Bhd, was incorporated back in August 1972, and has a paid-up capital of RM250 million.

It has five branches across Kuala Lumpur, Penang, and Johor Bahru, offering as stock and futures broking, research analysis, foreign stock services, share underwriting, nominees services, investment management and advisory, amongst many others.

The filing did not detail the potential value of the acquisition, but said that it will be financed by ways of shares and cash.

“We will make further announcements as and when there are material developments pertaining to the proposed acquisition,” it said.

In a press statement, Kenanga IB’s group managing director Datuk Chay Wai Leong said the potential acquisition could strengthen Kenanga's leading position in the retail broking space in Malaysia.

"Inter-Pacific Securities is a reputable and well-established independent stockbroking company, with a robust track record and strong retail focus.

"The potential acquisition will further strengthen Kenanga’s leading position in the retail broking space to become the top two largest stock brokers — by trading value — in Malaysia, with a combined market share of over 10% and retail market share of about 25%,” he commented.

Chay said the group is aiming to conclude the negotiation process within the next six months.

Kenanga IB had in December 2012 acquired ECM Libra Investment Bank Bhd's investment banking and stockbroking business for a total of RM875.1 million, which is satisfied by a combination of cash, and issuance of unsecured loan stocks and new Kenanga shares.

As at Dec 31, 2017, Kenanga IB has cash balances of RM1.35 billion with its total assets worth RM6.49 billion, while total liabilities stood at RM5.6 billion.

Kenanga IB closed half a sen or 0.78% lower at 63.5 sen today after 487,600 shares crossed, giving it a market capitalisation of RM458.45 million.