ECM Libra Financial Group Bhd. (ECML) is close to selling its investment banking unit to Malaysia’s K&N Kenanga Holdings Bhd. (KNK) for about 890 million ringgit ($281 million), two people with knowledge of the matter said.
Kenanga, a Kuala Lumpur-based brokerage backed by Deutsche Bank AG (DBK), will pay in cash and shares and the final terms will be set this week, said the people, who declined to be named as the information is private. ECM Libra plans to distribute at least 60 sen per share in cash and Kenanga stock to its shareholders, one of the people said.
Banks and brokerages have been merging in Southeast Asia’s third-biggest economy amid increased competition from foreign lenders including Bank of China Ltd. and Sumitomo Mitsui Banking Corp. Hong Leong Bank Bhd. (HLBK) bought EON Capital Bhd. for $1.7 billion in May, while RHB Capital Bhd. is awaiting central bank approval to acquire OSK Holdings Bhd.’s investment bank.
The sale will help Azman Hashim, ECM Libra’s biggest shareholder, meet Malaysian licensing rules that bar a single individual from being a key owner of more than one investment bank. Azman indirectly holds almost 17 percent of AMMB Holdings Bhd. (AMM), Malaysia’s fifth-biggest lender by market value, according to data compiled by Bloomberg.
ECM Libra Chief Executive Officer Lim Boon Soon didn’t return a phone call or e-mail to his office seeking comment. Kenanga’s head of group corporate affairs Siti Maslinda Sheikh Othman also didn’t immediately return a call. The companies announced on June 7 that they had finance ministry approval for the sale.
Kenanga is Malaysia’s sixth-biggest equities broker by trading value in May, while ECM Libra is No. 9, according to the stock exchange’s website.
The Edge Financial Daily reported that ECM Libra plans to make a 60 sen per share distribution earlier today. The Kuala Lumpur-based company doesn’t intend to sell its asset management operations, according to its June 7 exchange filing.
Its shares rose as much as 3.8 percent to 82 sen in Kuala Lumpur today, while Kenanga climbed as much as 3.2 percent to 64 sen, heading for its highest close since March.
Deutsche Bank, through Deutsche Asia Pacific Holdings Pte., holds a 16.6 percent stake in Kenanga, according to the company’s website. The biggest shareholder is CMS Capital Sdn. with a 25.1 percent stake.
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