Bloomberg News

Rashid Shares Climb as Fund Joins Three-Way Battle

March 07, 2007

Shares of Rashid Hussain Bhd., Malaysia's fourth-largest financial services group, climbed the most in a month after a state pension fund joined a three-way battle for the company.

Rashid stock rose 5.5 percent a day after Employees Provident Fund bid 2.2 billion ringgit ($627 million) for a third of the bank. Utama Banking Group Bhd., owner of the stake, jumped 19 percent, the most in eight months.

EON Capital Bhd. sweetened its offer and another rival suitor, a group led by Kuwait Finance House, may be forced to raise its offer in the bidding process, now in its fourth month. Employee Provident Fund, Malaysia's biggest state pension, already owns 31 percent of Rashid.

``It's a change in strategy for the fund, they seem to be taking a more active role'' as opposed to being a passive investor, said Raymond Tang, who manages $1.7 billion as chief investment officer of CIMB-Principal Asset Management Bhd. in Kuala Lumpur.

A group led by Kuwait Finance, the Persian Gulf's largest Islamic investment bank, has bid 2.16 billion ringgit for Utama's stake in Rashid. The group will seek approval from Malaysia's central bank to make an offer for the rest of Rashid and RHB Capital, Utama said yesterday.

Kuwait Finance House may lose its bid because the offer lacks certainty on financing and timing, people familiar with the matter said today.

Rashid owns 65 percent of RHB Capital Bhd. (RHBC), Malaysia's fourth-biggest bank.

EON's Offer

EON Capital, one of Malaysia's smallest lenders, raised its offer to buy Rashid Hussain and RHB Capital, it said in a statement to the stock exchange after the close of trading today. EON Capital raised its offer to buy all the shares of Rashid Hussain it doesn't already own to 1.97 ringgit a share, from 1.80 ringgit a share previously. It raised its offer to buy Rashid Hussain loan stocks, which can be converted into shares at a later date, to 2.03 ringgit from 1.85 ringgit each.

Shares of Rashid Hussain climbed 9 sen to 1.73 ringgit, the biggest daily gain since Feb. 7. Utama climbed 33 sen to 2.09 ringgit, the steepest advance since July 11 last year. Both stocks were suspended yesterday.

The state fund's bid increases the likelihood of Utama selling its stake in Rashid Hussain and Utama investors may be in line for a payout, said Aseambankers Malaysia Bhd. today.

``With three parties now in the running for the RHB stake, there is a higher possibility for the sale of UBG going through,'' Wong Chew Hann, an analyst at Aseambankers in Kuala Lumpur, wrote in a report. ``UBG would end up with a huge cash pile without a core business.''

ANZ Group

Looser restrictions on mergers and a five-year government spending plan to boost growth in Malaysia drew investment last year from Australia & New Zealand Banking Group Ltd.

Malaysian Prime Minister Abdullah Ahmad Badawi told reporters yesterday he won't block an acquisition by Employees Provident.

EON Capital and Kuwait Finance House are seeking control of Rashid as Southeast Asia's third-largest economy expands and demand for bank loans increases.

Malaysia's $147 billion economy expanded 5.9 percent in 2006, faster than the 5.2 percent growth a year earlier. The government has forecast expansion of 6 percent this year.

Bumiputra-Commerce Holdings Bhd., Malaysia's second-biggest bank, this month forecast loan growth of 10 percent in 2007 after Malaysia's central bank on Feb. 26 kept its benchmark interest rate unchanged at 3.5 percent for a seventh straight meeting to spur growth.

To contact the reporter on this story: Angus Whitley in Kuala Lumpur at awhitley1@bloomberg.net.

To contact the editor responsible for this story: Tony Jordan at tjordan3@bloomberg.net.


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