Tuesday March 12, 2013
Affin appears to be frontrunner to take over Hwang-DBS
By TEE LIN SAY
PETALING JAYA: The race is heating up in the financial sector for the acqusition of standalone investment banker Hwang-DBS (M) Bhd. Sources confirmed that the frontrunner for the deal is Affin Holdings Bhd, although other contenders include Alliance Finance Group Bhd, AMMB Holdings Bhd and K&N Kenanga Holdings Bhd.
One source said that Affin's bid, believed to be the highest, was at a whopping RM1.4bil, which works out to 1.5 times price-to-book-value.
At its current price of RM3.86, Hwang-DBS is trading at 1.05 times its book value of RM3.67. A takeover price of 1.5 times book would value Hwang-DBS at RM1.4bil or RM5.50 per share.
Analysts reminded that pricing aside, the winner of the Hwang-DBS bid would have to pass the suitablity test imposed by Bank Negara; for instance, the localisation factor. It is on this note that one source said that Bank Negara could view Affin favourably because of its major shareholder, Lembaga Tabung Angkatan Tentera (LTAT).
Goldman Sachs has been appointed to part-manage the sale of the stock broker.
Shares of Hwang-DBS have been actively traded amid this privatisation speculation, with its price running up by some 62% since Dec 28. Hwang-DBS founder Datuk Seri Hwang Sing Lue passed away on Dec 16 at the age of 83.
Hwang-DBS is the country's third-largest stockbroker with some 650 remisiers and RM18.1bil in assets. The group's investment bank HwangDBS Investment Bank Bhd is one of only two standalone investment banks in the country.
“It would be a coup for Affin if it got Hwang-DBS. It would instantly become a stockbroking giant; it would become an instant big league asset manager and a full-scope investment banking player,” said the source.
Both also have strong focus on the small and medium enterprise (SME) companies.
The largest shareholders of the company are DBS Bank Ltd in Singapore with a 27.67% stake, followed by Hwang Enterprise Sdn Bhd with 26.52%. They would like to dispose of its entire stockbroking and investment banking business following the passing of founder Hwang.
Affin Bank is currently one of the smallest banks in the country, and has yet to embark on any merger and acquisition exercises.
In 2010, Affin had announced it would be acquiring up to an 80% stake in PT Bank Ina Perdana, but the plan was put on hold following changes to rules governing Indonesia's bank ownership limits.