Wednesday September 12, 2012
MPHB Capital aims to be among top insurance providers
By CHOONG EN HAN
PETALING JAYA: MPHB Capital Bhd, a spin-off of Multi-Purpose Holdings Bhd’s (MPHB) non-gaming assets, aims to position itself as one of the top 10 general insurance providers based on gross premiums by end-2015.
Its insurance arm, Multi-Purpose Insurans Bhd (MPIB) which was parked under MPHB Capital, recorded gross premiums of RM477.9mil for the year ended Dec 31, 2011. It targeted to grow its general insurance business by focusing on expanding the classes of insurance with higher premium retention.
“MPIB also aims to strengthen and improve its position as a non-motor insurance provider. It aims to continuously underwrite a risk-balanced portfolio of products with non-motor portfolio commanding at least 75% to 80% of its overall gross premiums,” it said in its prospectus exposure on the Securities Commission’s website.
For the six months ended June, MPIB’s non-motor portfolio contributed 78.6% to its overall gross premiums.
On its property development ventures, MPHB Capital said it was seeking new investment opportunities and explore new strategies to develop existing land bank in Kuala Lumpur, Selangor and Penang, to optimise investment returns.
“To achieve this, we plan to either enter into profit sharing partnerships, strategic partnerships with property developers or disposals, to monetise our investments. Before entering into any property development partnerships, we will evaluate and assess our potential joint venture partners based on, among others, their track record and financial strength,” it said.
It also said in the prospectus that it would not have a formal dividend policy as it intended to adopt a policy of active capital management.
“It is our board’s intention to pay dividends to our shareholders. However, such payments will depend on a number of factors, including our earnings, capital requirements, general financial condition, distributable reserves and other factors,” it said.
The company will offer for sale 715 million shares of RM1 each to the shareholders of Multi-Purpose on the basis of one MPHB Capital share for every two Multi-Purpose shares.
The main shareholders of Multi-Purpose – Casi Management Sdn Bhd with 28.2% stake and Asia 4D Holdings Ltd (11.1%) – have indicated their intentions to subscribe in full their respective entitlements under the proposed offer for sale.
If the shares are not taken up fully, the company will have the right to allot any excess offer shares in the best interest of Multi-Purpose.
It was the company’s intention to allot the excess offer shares, if any, on a “fair and equitable basis” to be determined and in such manner to minimise the incidence of odd lots.
In a two-pronged exercise announced last month, Multi-Purpose divested its non-gaming assets and businesses to MPHB Capital for RM905.3mil to be satisfied by RM190.3mil in cash and 715 million new shares which have been offered for sale to shareholders of Multi-Purpose.
Upon completion of the share sale, Multi-Purpose will carry out a capital repayment exercise where the net proceeds of the share sale would be paid out to shareholders.
In a report yesterday, Alliance Research analyst Cheah King Yoong said the submission of exposure draft to the authorities showed that the group was on track to complete the demerger exercise through the listing of MPHB Capital by the fourth quarter this year.
He said despite the increased cautiousness of the domestic equity market, the research house maintained that Multi-Purpose would be re-rated with more clarity on the demerger exercise.
“The capital repayment of 49 sen (net sale proceeds amounting to RM700.3mil to be returned to shareholders), which have attractive yield of 13.9% based on the current share price of RM3.53, should continue to attract buying interests with investors,” he said.