MBSB to acquire Islamic lender Asian Finance Bank for RM645m

PETALING JAYA: Malaysia Building Society Bhd (MBSB) proposes to acquire the entire stake in Asian Finance Bank Bhd (AFB) for RM644.95 million in cash and shares, to create the country’s second largest Islamic bank with total assets of RM48 billion.
MBSB will convert all its conventional assets and liabilities to be syariah-compliant in order to inject into Islamic bank AFB.
The non-bank financial provider will pay for the deal with a combination of RM396.89 million cash and the issuance of 225.51 million new MBSB shares at an issue price of RM1.10 per share. The cash sum will be internally generated.
MBSB told Bursa Malaysia in a filing today that it had entered into a conditional share purchase agreement with the shareholders of AFB, namely Qatar Islamic Bank (66.67% equity interest), Financial Assets Bahrain WLL (6.67%), RUSD Investment Bank Inc (16.67%) and Tadhamon International Islamic Bank (10%).
The cash and shares options were derived from the valuations of 1.2 times and 1.5 times respectively, of the agreed net assets of the AFB of RM496.12 million as at Dec 31, 2017.
The issue price of the new shares represents a discount of about 1.12% to the five-day volume weighted average price of RM1.1125, up to its last trading day on Nov 3, 2017.
MBSB’s largest stakeholder, the Employees Provident Fund (EPF), will see its stake diluted from 65.56% to 63.16%, while second largest shareholder Tan Sri Chua Ma Yu’s equity interest will be reduced from 8.78% to 8.45%. Meanwhile, the vendors of AFB will collectively own a 3.66% stake in MBSB.
“The merged entity is expected to leverage on the strength of MBSB’s business, and the banking licenCe held by AFB is anticipated to provide a unique opportunity for the merged entity to emerge as a full-fledged Islamic banking franchise in Malaysia,” MBSB said.
Given that syariah-compliant financing is expected to account for 40% of total financing in Malaysia by 2020, the creation of an Islamic bank would provide MBSB the opportunity to participate in the growth of Islamic banking, locally and internationally, it added.
AFB, a full-fledged Islamic bank that was incorporated in Nov 28, 2005, has a branch each in Kuala Lumpur and Johor Baru as well as a representative office in Jakarta, Indonesia, its website shows.
Its net profit jumped almost seven times to RM3.65 million for the financial year ended Dec 31, 2016 from RM527,000 a year ago.The deal is expected to be completed by the first quarter of 2018.
Trading in MBSB shares will resume tomorrow.