MBSB to buy AFB for RM644.95m

KUALA LUMPUR: Malaysia Building Society Bhd (MBSB) is buying Asian Finance Bank Bhd (AFB) for RM644.95 million in cash and new MBSB shares.

MBSB, whose controlling shareholder is the Employees Provident Fund (EPF) with a 65.56 per cent stake, said the proposed merger would result in it becoming a full-fledged Islamic bank.

MBSB entered into a conditional share purchase agreement with the AFB shareholders yesterday.

AFB shareholders are Qatar Islamic Bank holding 66.66 per cent, Financial Assets Bahrain WLL (6.67 per cent), RUSD Investment Bank Inc (16.67 per cent) and Tadhamon International Islamic Bank (10 per cent).

MBSB will pay RM396.89 million in cash and RM255.51 million via the issuance of 225.51 million new MBSB shares at RM1.10 each.

The cash option was based on a valuation of 1.2 times AFB net assets valued at RM496.12 million as at December last year, while the shares option was based on a valuation of 1.5 times the accepted net asset.

After the proposed merger, EPF’s share in MBSB will slightly dilute to 63.16 per cent, while Qatar’s second-largest bank, Qatar Islamic Bank, will hold 0.73 per cent, RUSD Investment Bank 1.83 per cent and Tadhamon 1.1 per cent.

The RM1.10 issue price represents a discount of about 6.78 per cent to the five-day volume weighted average price of MBSB shares of about RM1.18 up to March 21.

MBSB will transfer all its syariah-compliant assets and liabilities (A&L) to AFB in tranches, for a consideration to be determined later based on the book value of A&L at the point of transfer.

All the residual conventional financial A&L that cannot be converted into Islamic A&L and noncore A&L of MBSB will be disposed of to third parties.

MBSB’s A&L includes RM2.53 billion nominal value of covered sukuk murabahah issued under a 15-year RM3 billion nominal value structured covered sukuk commodity murabahah programme.

MBSB is proposing to exchange the outstanding MBSB covered sukuk with new structured covered sukuk to be issued by AFB under a new structured covered sukuk programme to be set up by the unit.

MBSB said the proposed merger was expected to be completed by the first quarter of next year.

The subsequent tranches of the proposed transfer of assets and liabilities and disposal of the residual should complete in three years from the first tranche transfer.

Last year, AFB posted RM3.65 million in net profits.

AFB holds 50 per cent of Safeena (L) Ltd, a jointly-controlled entity with AmanahRaya Investment Bank Ltd, which funds purchase and upkeep of marine vessels. Ooi Tee Ching