KUALA LUMPUR (April 14): The Armed Forces Fund Board (LTAT) has avoided the need to seek the finance minister’s approval for its bid to privatise Boustead Holdings Bhd, as the exercise will not result in the board holding more than 50% effective interest in Affin Bank Bhd.
The changes in regulatory approval came after LTAT’s move to divest a 4.95% stake in Affin Bank to State Financial Secretary Sarawak for RM221.74 million cash on Thursday (April 13), which leaves the fund with a 28.26% direct stake in Affin Bank, down from 33.21% previously.
Boustead held another 20.93% stake in Affin Bank as at March 31, 2023.
UOB Kay Hian, the principal adviser for the privatisation deal, announced on Friday that the corporate exercise no longer requires a waiver from Bank Negara Malaysia to comply with Section 110 of the Financial Services Act 2013 (FSA).
Section 110 of the FSA requires any Ministry of Finance-approved company to submit an application to the central bank for them to hold more than 50% stake in a licensed financial institution.
Separately, Affin Bank’s dilution of stakes in its insurance arm AXA Affin General Insurance Bhd (AAGI) and AXA Affin Life Insurance Bhd (AALI) as a result of a merger with Generali Asia NV also saved LTAT another regulatory approval to raise shareholdings in Boustead.
The merger diluted Affin Bank’s shareholding in AAGI to 30% from 47% previously, leaving Generali owning the remaining 70% interest. The Italian insurer also bought a 70% stake in AALI from both AXA and Affin Bank.
UOB said the remaining central bank approval for LTAT to privatise Boustead is for compliance with Section 87(1) of the FSA, in regard to the ownership threshold of above 5% of Affin Bank.
UOB said this condition must be fulfilled by June 12 this year, and updated that as at Tuesday, LTAT had accumulated 75.05% interest in Boustead.
LTAT disposed of its 4.93% stake in Affin Bank to the Sarawak government at RM1.97 per share. The proceeds are earmarked for redeployment into investment purposes of other asset classes for the board, it had said.
LTAT’s takeover offer of Boustead at 85.5 sen valued the conglomerate at RM1.73 billion. The board has raised its stake in the asset- and debt-heavy conglomerate to 74.8%, from 59.42% prior to the offer.
Boustead’s only other substantial shareholder is Retirement Fund Inc (KWAP), with a 5.22% stake.