Malaysian fund weighs bid for EON Cap stake

KUALA LUMPUR - Malaysia’s Employees Provident Fund (EPF), is considering a formal proposal to acquire DRB-Hicom’s stake in EON Capital for about 9.5 ringgit ($2.7) a share, a newspaper said on Saturday.

By (Reuters)

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Published: Sat 3 Feb 2007, 5:36 PM

Last updated: Sat 4 Apr 2015, 9:47 PM

EPF, the state pension fund, had held informal talks with conglomerate DRB’s dominant stakeholder, Syed Mokhtar Al Bukhary, at the shareholder level to ease the sale, the Business Times said, quoting executives familiar with the matter.

DRB is the single-largest shareholder in Malaysian bank EON Capital, with a 20.2 percent stake, the paper said. The group’s management favoured exiting the bank this year to raise between 1.3 billion and 1.6 billion ringgit and help cut the group’s debt, which stands at about 1.9 billion ringgit, it added.

A DRB-Hicom official declined to comment on the report. Officials of the EPF could not be contacted for comment.

The EPF seeks control of the EON stake to position itself in the lead for a possible merger with Malaysia’s fourth-largest lender RHB Capital This is in the event that Hong Kong-based Primus Pacific Partners manages to win a stake in RHB Capital via a tie-up with Utama Banking Group, which owns about a third of the lender, the paper said.

RHB Capital is expected to be the focus of the next merger in Malaysia’s crowded banking industry. Both the bank and its parent, Rashid Hussain Bhd, are saddled with large debts.

On Thursday, Primus said it wanted to buy a stake in Rashid Hussain as part of a long-term investment in the Malaysian banking industry.

Primus, whose major shareholders include the Qatar Investment Authority and the Tsai family, which is behind Taiwan’s fifth-largest financial holding firm Fubon Financial, has received Malaysian central bank approval for talks to buy Utama Banking’s stake in Rashid Hussain.

Utama Banking owns 32.5 percent of Rashid Hussain, which in turn owns 65 percent of RHB Capital, Reuters data show.

The EPF, which owns about 31 percent of Rashid Hussain, also wants to use EON as a base to secure the non-Islamic assets of the RHB Group in the event that Kuwait Finance House manages to buy Utama’s stake in Rashid Hussain, the Business Times said.

Kuwait Finance House said on Friday its talks for the stake were at an early stage and it was premature to speculate on details of the proposed deal.

‘We will make an official announcement on the matter next week,’ its spokeswoman, Raja Zamilia Raja Mansur, told Reuters.

Although Kuwait Finance House has agreed to buy the Rashid Hussain stake from Utama, the deal is not exclusive and a price has not been disclosed. Utama is also talking to Primus.

EON Capital shares rose 0.7 percent to 7.15 ringgit on Friday, while Utama shares rose 2.6 percent to 1.56 ringgit and shares of RHB Capital gained 1.7 percent to 3.68 ringgit.

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