MUFG exits CIMB

Long-time shareholder divests stake in second largest bank

PETALING JAYA: Mitsubishi UFJ Financial Group (MUFG), a long-time shareholder in CIMB Group Holdings Bhd, is divesting its interest in the second-largest financial institution in Malaysia.

The Japanese banking group has offered to sell its entire 412.5 million shares in CIMB – held through Bank of Tokyo-Mitsubishi UFJ Ltd (BTMU) – at RM6.15 to RM6.30 apiece, according to sources.

The proposed selling price represents a discount of 2.5%-5% to CIMB’s closing price of RM6.46 yesterday.

News of MUFG’s proposed exit could have been the main trigger for CIMB’s shares falling 23 sen yesterday, wiping out RM2.08bil in the counter’s market capitalisation.

According to Reuters, an MUFG spokeswoman in Tokyo said the bank was considering the sale of its CIMB shares, but the number of shares and price had not been determined. She declined to comment further.

Separately, CIMB did not immediately respond to requests for comment on the proposed sale.

That block of shares offered by MUFG represents a stake of 4.56% in CIMB.

Through its wholly owned subsidiary BTMU, MUFG first entered into CIMB through a placement of 117 million shares at RM11.41 apiece in February 2007.

The placement deal by CIMB, then known as Bumiputra-Commerce Holdings Bhd, was estimated to have raised RM1.34bil in capital.

Over the years, MUFG increased its stake to become a substantial shareholder in CIMB. It was counted as one of the top-10 biggest shareholders in CIMB over the last 10 years.

Of late, MUFG, which is one of the largest financial institutions in the world, has been paring down its stake in CIMB.

It ceased to be a substantial shareholder on April 5 this year after its stake fell below 5% to the current level.

It is learnt that the block of shares that has been put up to the market through an accelerated book-building exercise has been taken up by local institutions.

“The likely scenario is for the block of shares to be acquired by local institutional investors – chances are it would be absorbed by existing shareholder or shareholders,” an analyst said.

In South-East Asia, CIMB is counted as the fifth-biggest bank by assets. It is also one of the two banks in Malaysia with a strong regional presence, especially in Indonesia.

The group saw its net profit grow 35.3% year-on-year (y-o-y) to RM2.28bil, or 25.56 sen per share, with an annualised return on equity of 9.9%, in the first half ended June 30, 2017. During the period in review, its revenue rose 13.8% y-o-y to RM8.68bil.

Headed by group chief executive officer and executive director, Tengku Datuk Seri Zafrul Abdul Aziz, the group is on track for a recovery after it was dragged down by its overseas operations in the last two years. It has launched a groupwide exercise to reduce cost and monetise its assets better with joint ventures with foreign financial houses.

Among them is a tie-up with a large stockbroker from China.

CIMB has a large presence in Indonesia and more than 20% of its income comes from the most populous country in the region. Because of its large presence in Indonesia, CIMB Group is attractive for investors wanting a stake in a bank with regional presence.