Jupiter Securities move necessary for CIMBChina Galaxy JV
KUCHING: CIMB Group Holdings Bhd’s (CIMB) proposed acquisition of Jupiter Securities Sdn Bhd (Jupiter Securities) garnered neutral views but analysts believe the move is essential for the group’s progress in establishing a partnership with China Galaxy Financial Holdings Ltd (China Galaxy).
In a filing to Bursa Malaysia, CIMB announced that its whollyowned subsidiary CIMB Group Sdn Bhd (CIMBG) signed a share purchase agreement (SPA) to acquire the entire interest of Jupiter Securities for a cash consideration of RM55 million.
Jupiter Securities, a subsidiary of Olympia Industries Bhd, is a participating organisation of Bursa Malaysia Securities Bhd. Jupiter Securities is expected to be a platform for the operations of the proposed partnership between CIMB and China Galaxy in Malaysia.
“We are ‘neutral’ on the announcement but understand the need for such acquisition. However, we view positively on the CIMB-China Galaxy joint venture given the significant benefits,” the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) opined.
It also noted that previously, CIMB estimated that there is a potential uplift of 100 basis points to cost/income (CI) ratio.
“Nevertheless, we do not foresee the positive impact in the immediate future. We believe that the impact will only be felt in FY18 given the time it will take to clear the various jurisdictional issues,” it added.
The research team further noted that Jupiter Securities group has a combined paid- up capital of RM24.6 million.
Therefore, it opined that the price is fair given the necessity to acquire a stock broking license.
“We do not foresee any difficulties for the group in relations to the cash consideration,” MIDF Research commented.