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KUALA LUMPUR, Sept 26 — Aabar Investments PJSC, owned by Abu Dhabi’s sovereign wealth fund, is working with Goldman Sachs Group Inc. as it explores options for its stake in RHB Capital Bhd., according to people with knowledge of the matter.
Aabar, the Malaysian bank’s second-largest shareholder with a 21.2 per cent stake, is seeking to protect the value of its investment as the lender negotiates a three-way merger with CIMB Group Holdings Bhd. and Malaysia Building Society Bhd., the people said. It hasn’t yet signed a formal mandate with Goldman Sachs, one person said, asking not to be identified as the talks are private.
CIMB, Malaysia’s second-biggest bank, and RHB are discussing structuring the deal as a reverse takeover, people familiar with the matter said this month. The structure of the transaction, which would value RHB at about 1.4 times book value, is designed to overcome any potential resistance from Aabar as it would require approval from only a majority of RHB investors, the people said.
Sophie Ramsay, a London-based spokeswoman for Goldman Sachs, declined to comment. Aabar officials didn’t respond to several e-mails and phone calls seeking comment.
Aabar bought its RHB stake from Abu Dhabi Commercial Bank PJSC for 10.80 ringgit per share in 2011, when RHB was the target of a takeover battle between the country’s biggest lender Malayan Banking Bhd. and CIMB. RHB shares traded at 8.86 ringgit at 3:07 p.m. today in Kuala Lumpur, 18 per cent below Aabar’s purchase price.
CIMB, RHB and Malaysia Building Society in July announced plans for a three-way merger that would create the country’s largest banking group by assets. The companies, which have a combined market value of about US$27 billion (RM87.86 billion), entered into a 90- day exclusive agreement to negotiate and finalise the price and structure of the merger, according to a July 10 joint statement from the lenders.
Under a proposal being discussed, RHB would issue new shares to acquire CIMB, whose market value is two and a half times bigger, people familiar with the talks said earlier this month. An outright acquisition by CIMB would require approval from 75 per cent of RHB shareholders, leaving Aabar in a stronger position to scuttle the deal.
Even so, engaging with Aabar may become more important amid uncertainty about whether Malaysian pension manager Employees Provident Fund, which owns stakes in all three banks, will be allowed by the country’s stock exchange to vote on the deal. EPF controls 40.9 per cent of RHB.
EPF wrote to the three lenders on August 26, saying it should be given a waiver allowing the fund to vote on the proposed merger, Malaysian newspaper The Star reported September 5.
CIMB and RHB are discussing making the merger proposal conditional on EPF being allowed to vote, three people familiar with the talks said. The exclusivity period for the merger talks expires October 8. — Bloomberg