PETALING JAYA: Singapore’s third largest banking group United Overseas Bank Ltd (UOB) is gaining a foothold in the local stockbroking scene with its proposed acquisition of east Malaysia-based Innosabah Securities Bhd.
The banking group’s stockbroking unit UOB-Kay Hian Holdings Ltd has proposed to acquire Innosabah from Kretam Holdings Bhd for RM56.68 million, which includes a RM15 million premium over its net assets.
“The purchase consideration shall be equivalent to the net asset value of Innosabah as at Dec 31, 2011, but without taking into account excluded assets comprising receivables of or indebtedness to Innosabah, and excluding goodwill and intangible assets plus a premium of RM15 million,” Kretam announced to Bursa Malaysia yesterday.
The price tag is equivalent to 1.36 times the adjusted unaudited net assets of Innosabah as at Sept 30, 2011, after accounting for the disposal of the excluded assets of RM41.68 million.
This acquisition follows a string of recent mergers and acquisitions (M&A) among local stockbrokers and investment banks, and would allow the UOB group to offer services ranging from equity trading to corporate advisory services.
It also leaves OCBC Bank as the only Singapore-based bank that does not yet have a presence in the local stockbroking industry.
DBS Bank Ltd, which is the largest bank in Southeast Asia, has a 27.7% stake in Hwang-DBS (M) Bhd, one of Malaysia’s top investment banking and brokerage groups.
It is understood that Innosabah, which was put under restricted trading at the height of the 1998 Asian financial crisis, has been up for sale for a while now as Kretam has been shifting its focus to plantations.
Kretam has seen a strong improvement in its financial performance over the past year, with net profit doubling to RM64.14 million for the nine months ended Sept 30, 2011 compared with RM30.09 million a year ago.
Its shares gained one sen to RM2.45 yesterday and are trading near a 12-month high of RM2.50.
After a series of M&A in the industry, Innosabah was left as one of the seven standalone stockbroking companies in the country, according to the Securities Commission’s website.
The other six are BIMB Securities Sdn Bhd, FA Securities Sdn Bhd, Jupiter Securities Sdn Bhd, KAF-Seagroatt & Campbell Securities Sdn Bhd, Malacca Securities Sdn Bhd and SJ Securities Sdn Bhd.
Although it is a standalone broker, Innosabah was granted approvals by the SC in January 2011 to undertake activities accorded to a “1+1” stockbroking company,
The 1+1 status, previously accorded to players who have merged with at least one other party, allows the stockbrokers to open branches, provide electronic access facilities and undertake structured product offerings, without resorting to further mergers.
With Asia seen as the main driver of global growth in the coming years, it is not surprising to see financial institutions and stockbrokers expanding their presence in the region.
A few Malaysian players have forged partnerships with stockbrokers in neighbouring countries, enabling them to offer an array of cross-border products and services and tap Asian’s domestic wealth.
Other foreign entities that are rumoured to be looking for stockbroking assets in Malaysia are OCBC Bank and Phillip Capital.
On the domestic front, the local stockbroking sector has seen a series of policy changes over the past decade to facilitate more consolidation within the industry.
Back in the 1990s, the authorities required all stockbroking firms to merge with at least one other party to consolidate the industry post Asian financial crisis.
To attain the universal broking status, there had to be a merger of three parties to undertake corporate finance advisory job.
Since 2000, some of these universal brokers have moved on to become full-fledged investment banks, which require an even higher minimum paid-up capital of RM500 million.
According to SC’s website, there are currently 14 investment banks, six stockbrokers with 1+1 mergers, seven standalone stockbrokers, seven foreign stockbrokers under special licence and one universal broker — PM Securities Sdn Bhd.
The six 1+1 stockbroking firms are A A Anthony Securities Sdn Bhd, Inter-Pacific Securities Sdn Bhd, JF Apex Securities Bhd, M & A Securities Sdn Bhd , Mercury Securities Sdn Bhd and TA Securities Holdings Bhd.
In 2009, the stockbroking industry was further liberalised to allow foreign ownership of up to 70% in the local players, from 49% previously.
There are seven foreign stockbroking firms here. These players, including the likes of CLSA Securities Malaysia Sdn Bhd and Credit Suisse Securities (M) Sdn Bhd, were granted free licences as part of the liberalisation process.
Ever since the relaxation, M&A in the industry have picked up with some of the notable ones like the marriage of Malayan Banking Bhd and Kim Eng Securities.
This came after Kim Eng ended talks with Berjaya Corp Bhd (BCorp) over BCorp’s proposed sale of Inter-Pacific Securities Sdn Bhd’s stockbroking business.
CIMB Group Holdings Bhd had earlier taken over Singapore-based GK Goh Holdings Ltd for a regional stockbroking and investment banking platform.
A merger between RHB Capital Bhd and OSK Holdings Bhd is also being finalised.
The banking group’s stockbroking unit UOB-Kay Hian Holdings Ltd has proposed to acquire Innosabah from Kretam Holdings Bhd for RM56.68 million, which includes a RM15 million premium over its net assets.
“The purchase consideration shall be equivalent to the net asset value of Innosabah as at Dec 31, 2011, but without taking into account excluded assets comprising receivables of or indebtedness to Innosabah, and excluding goodwill and intangible assets plus a premium of RM15 million,” Kretam announced to Bursa Malaysia yesterday.
The price tag is equivalent to 1.36 times the adjusted unaudited net assets of Innosabah as at Sept 30, 2011, after accounting for the disposal of the excluded assets of RM41.68 million.
This acquisition follows a string of recent mergers and acquisitions (M&A) among local stockbrokers and investment banks, and would allow the UOB group to offer services ranging from equity trading to corporate advisory services.
It also leaves OCBC Bank as the only Singapore-based bank that does not yet have a presence in the local stockbroking industry.
DBS Bank Ltd, which is the largest bank in Southeast Asia, has a 27.7% stake in Hwang-DBS (M) Bhd, one of Malaysia’s top investment banking and brokerage groups.
It is understood that Innosabah, which was put under restricted trading at the height of the 1998 Asian financial crisis, has been up for sale for a while now as Kretam has been shifting its focus to plantations.
Kretam has seen a strong improvement in its financial performance over the past year, with net profit doubling to RM64.14 million for the nine months ended Sept 30, 2011 compared with RM30.09 million a year ago.
Its shares gained one sen to RM2.45 yesterday and are trading near a 12-month high of RM2.50.
After a series of M&A in the industry, Innosabah was left as one of the seven standalone stockbroking companies in the country, according to the Securities Commission’s website.
The other six are BIMB Securities Sdn Bhd, FA Securities Sdn Bhd, Jupiter Securities Sdn Bhd, KAF-Seagroatt & Campbell Securities Sdn Bhd, Malacca Securities Sdn Bhd and SJ Securities Sdn Bhd.
Although it is a standalone broker, Innosabah was granted approvals by the SC in January 2011 to undertake activities accorded to a “1+1” stockbroking company,
The 1+1 status, previously accorded to players who have merged with at least one other party, allows the stockbrokers to open branches, provide electronic access facilities and undertake structured product offerings, without resorting to further mergers.
With Asia seen as the main driver of global growth in the coming years, it is not surprising to see financial institutions and stockbrokers expanding their presence in the region.
A few Malaysian players have forged partnerships with stockbrokers in neighbouring countries, enabling them to offer an array of cross-border products and services and tap Asian’s domestic wealth.
Other foreign entities that are rumoured to be looking for stockbroking assets in Malaysia are OCBC Bank and Phillip Capital.
On the domestic front, the local stockbroking sector has seen a series of policy changes over the past decade to facilitate more consolidation within the industry.
Back in the 1990s, the authorities required all stockbroking firms to merge with at least one other party to consolidate the industry post Asian financial crisis.
To attain the universal broking status, there had to be a merger of three parties to undertake corporate finance advisory job.
Since 2000, some of these universal brokers have moved on to become full-fledged investment banks, which require an even higher minimum paid-up capital of RM500 million.
According to SC’s website, there are currently 14 investment banks, six stockbrokers with 1+1 mergers, seven standalone stockbrokers, seven foreign stockbrokers under special licence and one universal broker — PM Securities Sdn Bhd.
The six 1+1 stockbroking firms are A A Anthony Securities Sdn Bhd, Inter-Pacific Securities Sdn Bhd, JF Apex Securities Bhd, M & A Securities Sdn Bhd , Mercury Securities Sdn Bhd and TA Securities Holdings Bhd.
In 2009, the stockbroking industry was further liberalised to allow foreign ownership of up to 70% in the local players, from 49% previously.
There are seven foreign stockbroking firms here. These players, including the likes of CLSA Securities Malaysia Sdn Bhd and Credit Suisse Securities (M) Sdn Bhd, were granted free licences as part of the liberalisation process.
Ever since the relaxation, M&A in the industry have picked up with some of the notable ones like the marriage of Malayan Banking Bhd and Kim Eng Securities.
This came after Kim Eng ended talks with Berjaya Corp Bhd (BCorp) over BCorp’s proposed sale of Inter-Pacific Securities Sdn Bhd’s stockbroking business.
CIMB Group Holdings Bhd had earlier taken over Singapore-based GK Goh Holdings Ltd for a regional stockbroking and investment banking platform.
A merger between RHB Capital Bhd and OSK Holdings Bhd is also being finalised.
