CIMB buys Jupiter Securities for RM55mil

Acquisition is strategic initiative in connection with partnership with China Galaxy

PETALING JAYA: CIMB Group Holdings Bhd is acquiring the entire equity interest in stockbroker Jupiter Securities from its shareholders for RM55mil cash.

Jupiter Securities is a subsidiary of Olympia Industries Bhd.

“The proposed acquisition is a strategic initiative taken by CIMB Group in connection with its proposed partnership with China Galaxy International Financial Holdings Limited, a subsidiary of China Galaxy Securities Co Ltd,” CIMB said.

Following the proposed acquisition, Jupiter Securities will act as the platform for the partnership’s Malaysian operations in the regional stockbroking business.

CIMB had announced the tie-up with China Galaxy Securities, one of China’s biggest stockbrokers, in October last year.

Following the announcement, StarBiz had reported, on March 17, that the banking group was looking at acquiring Jupiter Securities from Olympia Industries as part of the corporate exercise.

In response to the article, CIMB noted to the stock exchange that it was undertaking preliminary assessment on its options and this entailed “engaging in exploratory discussions with its stakeholders and various parties”.

The group announced yesterday that its unit, CIMB Group Sdn Bhd, had entered into a conditional share purchase agreement with the shareholders of Jupiter Securities for the entire stake.

Olympia Industries currently holds a 74.43% stake in Jupiter Securities, but the stake will be increased to 76.55%.

The company, in a separate filing with Bursa Malaysia yesterday, said it had, together with the other shareholders in Jupiter Securities, agreed to sell their stakes in Jupiter Securities to CIMB.

Olympia Industries will receive RM42.1mil for its portion of shares.

“The proposed disposal will enable Olympia to realise its investment in Jupiter Securities and reduce the group’s borrowings,” it said.

Out of the total proceeds from the disposal, RM15mil will be used to repay borrowings while RM26.3mil will be set aside as working capital.

Olympia Industries’ total cost of investment in Jupiter Securities as of end-June stood at RM21.7mil.

CIMB said the purchase consideration was arrived at after taking into consideration, among others, Jupiter Securities’ consolidated net assets, and the realisable benefit of the unutilised tax losses and unabsorbed capital allowances carried forward of Jupiter Securities and its subsidiaries.

The subsidiaries of Jupiter Securities are JS Nominees (Tempatan) Sdn Bhd, JS Nominees (Asing) Sdn Bhd, Jupiter Equities Sdn Bhd and Jupiter Research Sdn Bhd.

The group said the purchase consideration was subject to the completion of an audit adjustment, if any.

“The completion of the proposed acquisition is subject to, among others, approval from the relevant regulatory authorities,” it said in the filing to the stock exchange.

In June, CIMB Group formalised its strategic partnership with China Galaxy to manage its stockbroking business outside Malaysia.

The RM515mil deal gives China Galaxy a 50% stake in CIMB Securities International Pte Ltd, which operates an institutional and retail brokerage, equities research and associated securities businesses across Indonesia, Singapore, Thailand, Hong Kong, South Korea, India, the United Kingdom and the United States

The parties said they were moving towards securing the necessary regulatory approvals and aimed to complete the process by the fourth quarter of this year.