KWAP eyes ANZ stake in AMMB
Retirement fund prepared to hold up to 10% of merged banking entity
KUALA LUMPUR: The Retirement Fund Inc (KWAP) is keen on purchasing Australia and New Zealand Banking Group Ltd’s (ANZ) stake after the proposed merger between RHB Bank Bhd and AMMB Holdings Bhd.
However, KWAP is prepared to increase its stake in the merged entity up to 10%, something that the fund would be able to undertake without the need for Bank Negara’s approval.
If KWAP is able to hold up to 10% in the RHB-AMMB merged entity, it would mark the fund’s maiden entry as one of the major shareholders in the financial sector.
KWAP chief executive officer Datuk Wan Kamaruzaman Wan Ahmad said the fund was keen on buying ANZ’s stake after the proposed RHB and AMMB merger.
At present, ANZ owns 24% of AMMB and is the single largest shareholder. Post-proposed merger, ANZ’s stake will be down to about 11% in the enlarged banking group.
The Australian lender had in the past made it clear that it wants to divest its interest in
AMMB and had attracted several suitors.
However, because the size of its stake was large and it had an overwhelming presence in AMMB, it was not easy to get a buyer that would also get the nod from Bank Negara.
“The size of the (ANZ) stake in the combined RHB-AMMB banking group fits our investment appetite,” Wan Kamaruzaman told StarBiz in an interview at his office.
“We are interested, but of course at the right price, and we are going to subscribe up to a 10% stake from ANZ,” he said.
ON June 1, AMMB and RHB announced in a joint statement that both banks had received Bank Negara’s approval to commence merger negotiations.
The proposed exercise would be an allshare merger and the two banks have until Aug 30 to exclusively discuss the deal.
KWAP already has small stakes in both banks with a 3.05% stake in AMMB and 3.94% stake in RHB, Bloomberg data showed.
Wan Kamaruzaman said that the new stake in the merged entity is estimated to involve about RM3bil-RM4bil worth of investment.
KWAP has managed RM134bil worth of funds to date and its investment in the merged entity will mark the fund’s first major investment in a local bank.
“We may ask for a board seat in the new entity to see through the merger,” Wan Kamaruzaman said.
Previously, KWAP had refrained from asking for board representation in companies in which it was a substantial shareholder, except in Malakoff Corp Bhd and Prestariang Bhd.
“In general, we don’t want to be sitting on any company’s’ board,” he said.
As it is, the fund’s single biggest shareholding is in Bursa Malaysia Bhd, in which it has a 19.5% stake.
Meanwhile, Wan Kamaruzaman revealed that KWAP had invested more money in the stock market during the first half of the year.
He said KWAP’s recently revised mandate allows the fund to invest up to 40% of its assets in equities. This compares with 36% of its assets last year.
The pension fund is increasing its bets on the market amid a surge in interest from abroad, helped by a projected pick-up in cor- porate earnings.
“We see the rally in the local stock market as sustainable and will see a bit more upside at the current level,” he said.
The FBM KLCI had risen 7.7% since January to close at 1,768 points yesterday.
Wan Kamaruzaman expects the benchmark index to end the year at around 1,850 points. “This bull market still has legs for further gain, supported by the corporate earnings growth,” he said.
The rally so far this year has attracted foreign investors to return to the local stock market after two years of net outflows.
According to MIDF Research, since the beginning of the year, foreign investments into Bursa Malaysia have reached more than RM10bil, overtaking Thailand, Indonesia and the Philippines. In 2015, the net foreign outflow from the Malaysian equities market was RM19.5bil, while last year it was RM3bil.
The local bond market saw two consecutive months of inflows after Bank Negara introduced a new measure on the hedging of foreign currency exchange in April.
This resulted in foreign buying in the local bond market reaching RM16.9bil in April and May, after a record sell-off of RM26bil in
March.
This inflow of funds has helped to strengthen the ringgit, making it the second-best-performing currency in South-East Asia after the baht.
Wan Kamaruzaman expects the ringgit to strengthen to RM4.10 against the US dollar as the economic outlook of the country continues to improve.
On a year-to-date basis, the ringgit has strengthened 4.17% against the greenback.
Wan Kamaruzaman said the Malaysian economy is also expected to grow more than 5% in the second quarter of this year, buoyed by strong exports.
“Even at 5% of gross domestic product growth, it would reflect the first quarter’s economic performance,” he said.
In the first quarter ended March 31, the economy rebounded strongly by 5.6% compared with the same quarter a year ago, fuelled by private sector-led investments, consumption and exports.
Bank Negara’s projection is for the economy to grow between 4.3% and 4.8% this year.
SYDNEY: Australia & New Zealand Banking Group Ltd (ANZ) has narrowed the list of bidders for its wealth unit, which could fetch more than A$4bil (US$3bil), people with knowledge of the matter said.
The Melbourne-based bank has invited AIA Group Ltd, MetLife Inc and Zurich Insurance Group AG to make second-round offers for the business by Sept 15, according to the people. Shortlisted bidders will now conduct detailed due diligence and hold meetings with the unit’s management, the people said, asking not to be identified because the details are private.
ANZ is divesting its wealth arm, which includes life insurance operations and fund management, as part of a plan to sell legacy assets and focus on its core business. The bank sold its fleet finance operations and its stake in Shanghai Rural Commercial Bank Co this year, after disposing of other retail and wealth-management businesses in Asia in 2016.
The sale process is going well, and the bank will reduce the number of bidders from as many as five to “two or three,” chief executive officer Shayne Elliott said in an interview in Singapore. He didn’t identify any of the suitors.
“By the end of this calendar year, we should be able to announce who we’re going into partnership with and then it will be a very complicated two-year transition,” Elliott said.
The Australian Financial Review reported the shortlisted bidders earlier, citing unidentified people. A spokesman for ANZ declined to comment on the identity of the bid- ders. Representatives for AIA, MetLife and Zurich also declined to comment.
The decision on who buys ANZ’s wealth unit won’t be a matter of simply picking the highest offer, Elliott said, noting all of the bidders had taken slightly different approaches. The bank expects to continue to distribute life insurance, he said.
“We’re going to be joined at the hip for the next 20 years. We need to know confidently that this partner is committed to Australia,” Elliott said.
The lender is also keeping other possibilities on the table, including either demerging the wealth unit or pursuing an initial public offering of the business. “We’re willing to look at all the options,” Elliott said. “One of the solutions could be somewhere in the middle. We pick a partner who buys a sizeable chunk of the business and we float a little part.”
ANZ is also selling its stake in Chinese lender Bank of Tianjin Co. The bank may look to divest its 39% stake in Jakarta-based lender PT Bank Pan Indonesia, though Elliott said there was no active process under way.
“I’d imagine over the next 12 to 20 months, it’d be something we’d engage on,” he said.
As ANZ has sold off legacy businesses, it has also trimmed costs and cut staff at home. Elliott said that overall headcount was down around 7% since January last year, mainly from attrition, and he expects it to drift lower.
“We are in a really tough game,” Elliott said. — Bloomberg