Hong Leong Capital (HLG) Bhd., a unit of the Malaysian insurance and banking group controlled by billionaire Quek Leng Chan, surged to a five-year high after receiving a buyout offer from its parent.
Hong Leong Capital, which holds the group’s investment banking assets, jumped as much as 23 percent to 1.75 ringgit in Kuala Lumpur trading today. It pared gains to 1.72 ringgit as of 10:20 a.m. and was poised for its highest close since January 2008. The stock was today’s biggest gainer on the Bursa Malaysia Finance Index. (KLFIN)
Hong Leong Financial Group Bhd. (HLFG), which already owns 79.09 percent of Hong Leong Capital, offered 1.71 ringgit per share for the remaining stake it doesn’t already own, according to yesterday’s Kuala Lumpur stock exchange filing. That’s a 20 percent premium to its last traded price of 1.42 ringgit before the counter was halted on Jan. 11.
“This would be an opportunity for shareholders to cash out at a decent price,” Desmond Ch’ng, an analyst at Malayan Banking Bhd., wrote in a report today. “Hong Leong Capital has historically traded at a discount to book value given the lack of liquidity and interest.”
The proposal would streamline the Hong Leong group, cutting its listed financial units in Kuala Lumpur to two from three. Hong Leong Financial said it doesn’t plan to maintain Hong Leong Capital’s listing status.
The buyout should have a neutral financial impact on Hong Leong Financial, Ch’ng said, maintaining Maybank’s buy rating with a higher price target of 15.70 ringgit, compared with 15.60 ringgit previously.
Hong Leong Financial fell 0.1 percent to 14.40 ringgit, while the benchmark FTSE Bursa Malaysia KLCI Index rose 0.2 percent. Hong Leong Bank Bhd., the group’s retail banking unit which isn’t involved in the transaction, was unchanged at 14.98 ringgit.
Hong Leong Capital provides investment banking, stock and futures broking as well as fund-management services through its units Hong Leong Investment Bank Bhd. and Hong Leong Asset Management Bhd.
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