KUALA LUMPUR (Dec 15): RHB Bank Bhd declined by as much as 5.13% today, on news that Aabar Investments PJS was disposing of its entire stake in the lender.
The counter, which lost as much as 30 sen earlier today, eventually finished at RM5.69 — down 2.74% or 16 sen after 10.55 million shares were traded — valuing it at RM22.82 billion. It was the third biggest loser on the local bourse today.
Bloomberg reported yesterday Aabar was offering 169.5 million shares in RHB. The deal reportedly represents a 4.23% stake, which is Aabar's entire share in the bank. Aabar ceased to be a substantial shareholder of RHB on June 24, 2019 after disposing of 231 million shares or a 5.76% stake in RHB.
The lot it was offloading was reportedly offered at between RM5.45 and RM5.62 apiece, with the entire block valued at RM923.78 million.
A check with Bloomberg today showed that some 169.52 million shares, representing a 4.2% stake in RHB, were disposed of via 15 off-market trades today. All of the trades were done at RM5.50 apiece, for a total of RM932.38 million.
In a note this morning, Maybank Investment Bank Research analyst Desmond Ch'ng noted that the disposal of Aabar's 4.2% stake was a positive movement, as it cleared the final overhang on the stock.
"It also marks the exit of the Middle Eastern investor that, along with its sister company Abu Dhabi Commercial Bank (ADCB), had been a shareholder since 2008," Ch'ng said, noting Aabar sold off the stake via a secondary placement.
Ch'ng said the disposal, concluded at RM5.50 per share, represented a 6% discount to RHB's price of RM5.85 at market close yesterday.
Ch'ng calculated that with the final placement of Aabar's stake, which would have raised RM932 million, the total proceeds from all four placements done by Aabar when it comes to RHB shares stood at some RM3.8 billion. This excluded dividends that Aabar would have received over the years from RHB.
Recall that ADCB acquired a 24.9% stake in RHB in 2008 for RM7.20 per share, totalling RM3.9 billion. Aabar then acquired ADCB's stake in the lender in June 2011 for RM10.80 per share for a cumulative sum of RM5.9 billion.
Following this, Aabar's stake was whittled down to 17.7% in 2016 when Aabar did not participate in RHB's one-for-five rights issue. Subsequently, there were three placement exercises between 2018 and 2019 which further diluted Aabar's stake in the bank to 14.7%, 10%, and 4.2%.
Ch'ng also maintains his "buy" call on RHB, with a higher target price (TP) of RM6.70 (from RM6.20 previously), pegged to a higher calendar year 2021 (CY21) price-to-book value of 0.9 times, from 0.8 times previously, with a CY21 return on equity of 8.7% to account for improved liquidity and sentiment.
Bloomberg indicated that RHB has 18 analysts covering it, with 14 having it on "buy" and four keeping it at "hold" — with a consensus TP of RM5.98, with individual TPs ranging from RM5 to RM7 per share.