Kenanga in talks to buy Interpac
Move to result in one of the largest stockbrokers in Malaysia
PETALING JAYA: Kenanga Investment Bank Bhd has begun talks to acquire the stockbroking business of Inter-Pacific Securities Sdn Bhd in a move that would create one of the largest stockbrokers in the country.
Kenanga Investment hopes to close the deal within six months.
“The potential acquisition would further strengthen Kenanga Investment’s leading position in the retail broking space to become the top-two largest stockbrokers in Malaysia, with a combined market share of over 10% and retail market share of about 25%,” group managing director Datuk Chay Wai Leong said in a statement yesterday.
The firm, in a separate filing with Bursa Malaysia yesterday, said Bank Negara, in a letter dated May 16, stated that it had no objection to Kenanga Investment commencing negotiations with Inter-Pacific Securities to acquire its stockbroking business-related assets, liabilities and contractual arrangements.
“The proposed acquisition will be financed by shares of Kenanga Investment and cash,” it said.
No details on the value of the deal were made available in the announcement yesterday.
“We will make further announcements as and when there are material developments pertaining to the proposed acquisition,” it added.
Kenanga Investment, founded in 1973, offers a wide range of financial services. It operates through 32 branches nationwide and boasts of the largest remisier network in the country.
Inter-Pacific Securities, meanwhile, was established in 1972 and has five branches across Kuala Lumpur, Penang and Johor Baru and a paid-up capital of RM250mil.
“Inter-Pacific Securities is a reputable and well-established independent stockbroking company, with a robust track record and strong retail focus,” Chay said.
“We are looking forward to a smooth and fruitful negotiation process, and aim to conclude within the next six months,” Chay added.
Kenanga Investment made a pre-tax profit of RM23.6mil on revenue of RM182mil in the first quarter ended March 31, 2018.
The increase was mainly due to bad debt recovery from a court case settlement and higher net brokerage and management fees income generated, the company said last week.
Its stockbroking business generated a pre-tax profit of RM11.8mil, while its investment banking activities contributed RM2.7mil.
The group said last week that it expects to perform “better” this year amid a buoyant outlook for the stock market for the rest of the year.
The daily trading value of shares on Bursa Malaysia averaged around RM4.9bil in the first quarter.
In a related development, digital equites trader Rakuten Trade Sdn Bhd announced that it has over 12,000 clients, of which over 40% were first-timers to the equity broking market in Malaysia.
Rakuten Trade managing director Kaoru Arai said almost 80% of its clients are below the age of 40 and most of them are active traders.
“The company’s growth was also due to the support received from both Kenanga Investment Bank Bhd, Rakuten Securities Inc, local regulators, business partners and Rakuten Trade employees,” he said in a statement.
Rakuten Trade is a joint venture between Japan’s Rakuten Securities Inc and Kenanga Investment.
Moving forward, Rakuten Securities president Yuji Kusunoki and Arai announced that the platform would soon launch a contra trading facility as its second product, which would complement the existing cash upfront facility.
Rakuten Trade also attributed its client appeal on its Rewards Eco System, the first of its kind in Malaysia, which offered access to three of the country’s biggest loyalty points providers, AirAsia BIG, B Infinite (part of Berjaya Group) and BonusLink, under one platform.