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Exploring new horizons? Abu Dhabi’s Aabar considers write-down of $1.9 bln rhb deal

Exploring new horizons? Abu Dhabi’s Aabar considers write-down of $1.9 bln rhb deal

The write-off makes long-term sense for the fund says experts; Aabar would then likely end up with a stake in a bigger bank with a stronger valuation.

August 16, 2011 11:22 by



which translates to just above 1.8 times book.

A Maybank official involved in the deal was skeptical that Aabar would be willing to take such a hit. At 10.80 ringgit a share, Maybank was simply “not interested”, the official told Reuters.

Investors have also been skeptical about Aabar’s valuation of RHB.

The stock hit a closing peak at 9.98 ringgit per share, or just under 2.1 times book, after Maybank and CIMB announced their interest last June.

RHB closed at 9.03 ringgit on Monday, about 1.85 times book. In comparison, Maybank trades at 2.1 times book value and CIMB is valued at 2.56 times book.

RHB, which declined to comment on the possible revaluation, has said it is open to merger opportunities at the right price.

The Central Bank, Bank Negara Malaysia , has said in the past that it wanted RHB’s main shareholder, the Employees Provident Fund (EPF), to pare down its stake.

EPF presently holds about a 45 percent stake in RHB. Malaysian authorities are encouraging consolidation to create bigger banks that can grab regional market share.

The remaining 30 percent is mostly held by local funds.

YET TO PAY

Aabar has yet to make payment for the stake purchase and has missed an internal July 31 deadline, three sources with knowledge of the matter said, further fuelling speculation that Aabar is considering a write-down in its books.

The fund rejected a financing package presented by a consortium of international banks as being too expensive and is likely to turn to its parent International Petroleum Investment Corp (IPIC) for a loan to fund the payment, said the sources, who were not authorised to talk publicly about the matter.

IPIC was not available for comment.

Aabar, which was taken private by IPIC last year, now needs to make the payment before August 31 to complete the deal, one Gulf-based source said. It will pay interest of 6.5 percent per annum on the delayed payment, the source added.

The deal between the two state-owned firms is still expected to be completed as the oil-rich emirate will not face difficulty finding other funding avenues, the sources have said.

ADCB booked a $357 million gain from the sale when it reported its second-quarter results earlier in the month. (Additional reporting by Stanley Carvalho in Abu Dhabi and Liau Y-Sing in Kuala Lumpur, Editing by Lincoln Feast)

By Dinesh Nair and Min Hun Fong



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