Abu Dhabi fund eyes sale of $1.3B Malaysia Bank stake

Abu Dhabi fund eyes sale of $1.3B Malaysia Bank stake

An Abu Dhabi sovereign wealth fund is exploring the sale of its $1.3 billion stake in Malaysian lender RHB Capital Bhd six months after buying the shares, sources familiar with the matter told Reuters, and has engaged in early talks with Japan's Sumitomo Mitsui Banking Corp (SMBC).

February 14, 2012 2:21 by Reuters

Aabar Investments’ 25 percent holding in RHB has dropped in value by about a third since it bought the stake for $1.9 billion last year from Abu Dhabi Commercial Bank PJSC. Sources say Aabar has sounded out potential buyers of the stake, including SMBC.

The sources said talks with SMBC were preliminary and it was unclear whether the discussions would lead to a transaction.

A separate source close to SMBC said the Japanese bank was currently not very keen on buying the stake.

The sources declined to be identified as they were not authorised to speak to the media.

Repeated calls to Aabar Chief Executive Mohamed al-Husseiny were not returned. An SMBC spokesman declined comment. RHB Group Managing Director Kellee Kam said he could not comment on the matter.

Abu Dhabi Commercial Bank paid $1.23 billion for the stake in 2008 and sold it to Aabar in June of last year after a competitive auction that involved several suitors.

After attracting several interested bidders, the stake was sold to Aabar. Aabar paid 10.80 ringgit per share, or about 2.25 times RHB’s book value, far more than the valuation commanded by some other Malaysian lenders at the time. RHB shares traded flat at 7.24 ringgit on Monday.

Malaysia’s strong economic growth attracted several buyers to last year’s auction, including global private equity firms Carlyle Group, TPG Capital LP and Sumitomo Mitsui Financial Group.

Aabar, the largest single shareholder in Daimler AG and commodities giant Glencore International Plc , surprised many by scooping up the ADCB stake at the last minute, struggling to finance the deal.

Eventually, in a complex transaction involving several layers of Abu Dhabi finance, Aabar’s parent International Petroleum Investment Corp took out a $1.9 billion loan from ADCB to fund the June purchase.

Aabar’s aggressive bid also scuppered a long-awaited consolidation in Malaysia’s banking sector. Malaysia’s two largest banks, Malayan Banking Bhd and CIMB Group Holdings Bhd had been planning to make a full-blown bid for RHB, however Aabar’s $1.9 billion purchase set a high valuation bar. (By Denny Thomas and Dinesh Nair; Reporting by Denny Thomas in Hong Kong and Dinesh Nair in Dubai; Additional reporting by Taiga Uranaka in Tokyo, Yantoultra Ngui Kuala Lumpur and Saeed Azhar in Singapore; Editing by Michael Flaherty and Chris Lewis)