KUALA LUMPUR: Public Bank Bhd has entered into a conditional sale and purchase agreement with the estate of the late Tan Sri Dr Teh Hong Piow and Consolidated Teh Holdings Sdn Bhd (ConTeh) to acquire 44.15% equity interest in LPI Capital Bhd for RM1.72 billion.
LPI, a company listed on the Main Market of Bursa Malaysia, has been in operation for more than 60 years and is mainly involved in the underwriting of general insurance. It currently has 21 branches throughout Malaysia and one branch in Singapore, and operates in Cambodia through an associate company.
Speaking at a press conference after the signing ceremony today, Public Bank managing director and CEO Tan Sri Dr Tay Ah Lek said the proposed acquisition represents an opportunity for Public Bank to expand its general insurance segment into the Malaysian market through the LPI group.
“This will allow the enlarged Public Bank Group to establish an immediate market presence and strong foothold in the general insurance segment in Malaysia as a comprehensive complementary service to its current financial services and family takaful offerings,” he said.
He added that the proposed acquisition is in line with the group’s plans to expand beyond just organic growth but through strategic acquisitions to expand product and service offerings.
“This is as evident by our recent completion of the acquisition of Public Bank Securities Vietnam Company Limited which allowed the group to expand its financial services offering in Vietnam with the inclusion of securities trading services.”
Tay said the acquisition of LPI represents an opportunity to accelerate the vision to move towards a “universal banking model” that offers a range of financial and other related products and services under the same group.
“With our existing network of over 260 branches located throughout the country, LPI Group would be able to leverage and expand its distribution channels and further grow its general insurance business in Malaysia,” he said.
He said it would also be able to tap into the sales and distribution network of LPI and further expand its reach to cover clients and customers of LPI. “Aside from the mutual cross selling of products and services, Public Bank and LPI will also explore possibilities on developing new integrated products and services catering to our customers’ financial and insurance needs.”
The acquisition price reflects a price-to-book ratio of 1.71 times and a price-to-earnings ratio of 12.41 times. The acquisition translates into a 24.62% discount compared to LPI’s latest market closing price of RM13 a share.
Tay said there will be no changes in LPI’s management given the company’s strong and dedicated leadership.
“In any acquisition, when you acquire the company, and if the company has got good management and is well run by the present team of management, I don’t think we should touch it. And in this case, LPI has got a dedicated management team and has been running very efficiently. There is no intention (to change). The management team will stay,“ he explained.
The proposed acquisition is subject to the approval of non-interested shareholders of Public Bank at an extraordinary general meeting (EGM) to be held at a later date. Should the proposed acquisition be approved at the EGM, Public Bank will be obliged to extend an unconditional mandatory takeover offer for the remaining equity interest in LPI not already owned by it.
Public Bank has received approval from the Ministry of Finance and Bank Negara Malaysia for the proposed acquisition and is expected to complete the corporate exercise in the first quarter of 2025.
Barring any unforeseen circumstances, Public Bank said, the proposed acquisition is expected to be value accretive and contribute positively to the future earnings of Public Bank Group.
At the same press conference, Teh Li Shian Diona, the youngest daughter of Teh Hong Piow, announced that the Estate and ConTeh intend to undertake a restricted offer for sale of a portion of their Public Bank shares, progressively over a five-year period and will be in compliance with the Financial Services Act.
She said, “Although we will be streamlining our stake, I would like to take this opportunity to reiterate our firm and unwavering commitment to continue as the major shareholders of Public Bank. This is not just a role or title for us – it is an honour and a responsibility that we deeply cherish. We are devoted to upholding my father’s legacy and continuing the stewardship of this esteemed institution.”
AmInvestment Bank Bhd is the independent adviser to advise the non-interested directors and non-interested shareholders of Public Bank in respect of the proposals.
