KUALA LUMPUR, April 2 — AMMB Holdings Bhd fell 1.0 per cent in the early trade today after the banking group proposed a private placement to raise an estimated RM810 million on Thursday.
As at 10.40am, AMMB eased three sen to RM2.97, with 2,820,200 shares changing hands.
The group, on Thursday, said it plans to issue up to 300 million new shares, or 9.97 per cent, of its current share capital to raise additional funds to strengthen its core capital ratios, including Common Equity Tier 1 (CET1) and Total Capital Ratio (TCR).
The private placement exercise is to raise funds to support working capital needs arising from a RM2.83 billion global settlement with the government in relation to the 1Malaysia Development Bhd (1MDB) scandal.
Separately, the group also announced that it will undertake a one-off goodwill impairment of up to RM2.09 billion to be booked in the fourth quarter of financial year ended March 31, 2021 results, which mainly comprise consolidation of previous acquisitions and corporate exercises of its conventional businesses.
Kenanga Research said the exercise came as a surprise as AMMB’s management had previously assured that the group possesses sufficient capital buffers.
“While we do not expect all of the above to result in any material impact to earnings, we are negative on the dilutive effects to shareholders value.
“That said, it will be interesting to see as to whom these new shares would be placed out to, as the announcement specified that the placement is expected to facilitate the entry of new institutional investors into the group,” it said in a note.
The brokerage said it would not make any changes to its earnings assumptions but pen in the additional 300 million shares into its financial year ending March 31, 2022 share capital as it expects the placement to be taken up.
“The kitchen sinking from the above also translates to downside book value adjustments,” said Kenanga Research. — Bernama