ABU Dhabi Commercial Bank PJSC, the United Arab Emirates' third-biggest bank by assets, agreed to pay 3.9 billion ringgit (US$1.2 billion) for 25 percent of RHB Capital Bhd, the biggest overseas investment in a Malaysian bank.
Abu Dhabi Commercial will pay 7.20 ringgit for each share of Malaysia's fourth-largest bank, Employees Provident Fund, the pension fund selling the stake, said in a statement issued to Bloomberg News yesterday.
That's 38 percent more than the stock's closing price yesterday. Japan's Sumitomo Mitsui Financial Group Inc is among possible buyers of a further 5 percent of RHB Capital, the fund said.
UAE banks, flush with cash from surging growth in the past three years, are looking overseas as the region diversifies from oil revenue.
Abu Dhabi Commercial joins Australia & New Zealand Banking Group Ltd and Bank of Tokyo-Mitsubishi UFJ in injecting funds into Malaysian banks, which are seeking the financial clout to compete across Asia.
"RHB Capital has greater strengths to thrive in the future," analysts at HwangDBS Vickers Research Sdn in Kuala Lumpur said in a report yesterday.
Suspended
RHB Capital shares were suspended from trading. The stock rose 2.9 percent to 5.35 ringgit and last traded at 5.25 ringgit in Kuala Lumpur after the announcement.
The stock is down 10 percent this year, compared with the 12 percent drop in the Malaysian benchmark index. Abu Dhabi Commercial is up 8.8 percent this year and closed at 5.81 dirhams yesterday.
Sumitomo, Japan's third-largest bank by revenue, hasn't formally bid for a stake in RHB Capital, Employees Provident Chief Executive Officer Azlan Zainol told reporters.
Sumitomo said in January it will pursue an existing alliance with RHB Capital, and may invest in some Southeast Asian banks.
Abu Dhabi Commercial won approval from Malaysia's government in March to buy 25 percent of RHB Capital.
The Middle East bank will help RHB Capital expand into Vietnam and Indonesia, it said at the time. Employees Provident, which owns 82 percent of the bank, is bringing in partners to double profit at the company.