Source from (The Star Online): http://biz.thestar.com.my/news/story.asp?file=/2013/6/12/business/13228637&sec=business
Published: Jun 12, 2013
Its acquisition of Dubai Financial Group’s 30.5% stake is close to completion
Yesterday, BIMB said in a filing with the stock exchange it had received Bank Negara's consent to commence negotiations with Lembaga Tabung Haji (LTH) on the latter's stake in Bank Islam. BIMB is proposing to buy LTH's 18.5% interest in Bank Islam.
LTH is the ultimate holding company of both BIMB and Bank Islam. Apart from its direct interest in Bank Islam, the pilgrim fund also owns a 51.5% stake in BIMB. BIMB, meanwhile, has a 51% interest in Bank Islam.
Together with the DFG portion, BIMB's stake in Bank Islam would increase to 81.5%. It would gain full control of Bank Islam if the proposed move to buy LTH's stake goes through.
BIMB said negotiations are to be completed on or before Dec 31, adding that the consent from Bank Negara should not be construed as an approval for the proposed acquisition.
An analyst said the proposed move was a positive one, as it would plug “minority leakage”.
Bank Islam is profitable and contributes to slightly over 80% of BIMB's bottomline, with the balance derived from Syarikat Takaful Malaysia Bhd, in which BIMB has a 65.2% stake.
For the first quarter ended March 31 Bank Islam achieved a profit before zakat and tax of RM150.3mil as compared to RM130.6mil in the previous corresponding period on higher fund-based income.
StarBiz had earlier reported that BIMB was on the verge of completing its purchase of DFG's stake, with valuation and pricing parameters having been somewhat determined.
BIMB group managing director and chief executive officer Johan Abdullah was quoted as saying that discussions between both parties had resulted in DFG offering a price for the stake, which was counter-offered by BIMB.
According to sources, BIMB is believed to be currently working on the funding mechanism, weighing various options that may include a rights issue.
Bank Negara has given the parties until June 30 to conclude negotiations, which is an extension from the initial March 31 deadline. Talks had earlier stalled due to pricing issues.
It is not known how much the 30.5% stake was valued at but banking sources reckon that it could be between 1.6 times and 1.8 times price-to-book value.
To recap, DFG had first acquired an interest in Bank Islam in October 2006 to facilitate the latter's recapitalisation. However, it has since been looking to hive off its interest to pare down debts.
BIMB's plans to transfer its listing status to Bank Islam in still in the pipeline, a proposition analysts say is attractive considering the direct exposure investors could gain to a standalone Islamic bank, as opposed to a holding company with a couple of businesses.
It would also give the bank an avenue to raise capital for expansion and strengthen its Tier-1 capital to cater to the new Basel III framework.
Bank Islam managing director Datuk Seri Zukri Samat, in an interview with StarBizWeek in mid-March, was quoted as saying the bank's listing was on the cards and that it was a medium-term agenda which could be implemented until next year.
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