Maybank wants to buy kim Eng - FamiLee happy liao

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Maybank offers to buy brokerage Kim Eng
Deal will give it a regional presence in investment banking, stockbroking
By Yasmine Yahya

IN ITS quest to become a regional financial powerhouse, Malaysia's Maybank is offering to buy Singapore-listed brokerage Kim Eng in a deal worth as much as $1.79 billion.

'Maybank has been trying to create a stronger regional footprint, and this is a short-cut way to its ambitions,' said fund manager Lye Thim Loong at Avenue Invest in Kuala Lumpur, according to Bloomberg.

Kim Eng has offices not only in Singapore, but also in Thailand, Indonesia and the Philippines.

'The capital markets in all these countries are growing quite rapidly. And it also benefits Maybank's Malaysian business - it gives them a distribution platform to sell Maybank products and services to investors outside Malaysia,' a source close to the deal told The Straits Times.

The deal comes after several weeks of speculation which saw shares of one of Singapore's largest brokerages shoot up on rumours that a takeover deal was imminent.

Maybank chairman Megat Zaharuddin Megat Mohd Nor noted yesterday that the acquisition would give the bank a regional presence in investment banking and stockbroking.

Maybank has a commercial banking presence across South-east Asia, but its stockbroking and investment banking operations are confined to Malaysia.

'It gives us the immediate platform to aggressively build up our global wholesale banking capabilities in Asean and beyond,' he said in a statement.

A source close to the deal said: 'They had evaluated several targets in the past but this transaction made a lot of sense. Kim Eng stands out because of its strong positions across South-east Asia. Nobody has the platform that Kim Eng has.'

Kim Eng is also growing its presence in Hong Kong, New York and London.

Yesterday, Maybank said that its Aseam Credit unit had bought a 44.6 per cent stake in Kim Eng for $798 million at $3.10 per share. This involved buying over Kim Eng chief executive Ronald Ooi's 15.4 per cent stake and a 29.2 per cent stake held by Taiwan's Yuanta Securities Asia Financial Services.

That move has now triggered a general offer for the rest of the shares. If Maybank gets enough acceptances, it plans to delist the brokerage from the Singapore Exchange.

At a price of $3.10 per share, the offer is already 15 per cent above the last-traded share price of $2.70.

CIMB analysts noted in a research note yesterday that investors who bought into Kim Eng prior to its share price run-up in mid-December will be making a cool 55.8 per cent return on investment.

Kim Eng's share price shot up 13 per cent to $2.24 on Dec 17 when rumours began swirling that the firm was in talks with a potential buyer.

Its trading volume also skyrocketed 20 times. Kim Eng confirmed the rumours the same day. Since then, Kim Eng shares have risen steadily, to a close of $2.70 on Wednesday. Trading was halted yesterday and will resume tomorrow.

The takeover of Kim Eng mirrors the move in 2005 by Malaysia's CIMB to buy GK Goh Holdings' securities arm. The Kim Eng deal means that Lim & Tan Securities and Phillip Securities will be the only non-bank linked brokerages in town.

The three local banks' brokerage arms are DBS Vickers, OCBC Securities and UOB Kay Hian.

The Bangkok-listed shares of Kim Eng Securities, meanwhile, continued trading and rallied on the Maybank announcement, soaring as much as 11.9 per cent in intraday trading yesterday before closing up 2.5 per cent to 16.3 baht.

The proposed acquisition is expected to be completed by the end of May.

Maybank will finance the deal through internal and external funds, said chief executive Abdul Wahid Omar at a press conference in Kuala Lumpur yesterday.

In addition to the $1.79 billion purchase price for Kim Eng, Maybank may have to find an additional RM500 million (S$211 million) if required to launch an offer for Kim Eng's subsidiaries.

Maybank plans to talk to Thai and Filipino regulators on a possible general offer for Kim Eng's listed units in those markets, Mr Abdul Wahid said.

Bloomberg News quoted Susumu Taroura, a spokesman for Mitsubishi UFJ Morgan Stanley Securities Co, which owns 29 per cent of Kim Eng, as saying it had not decided whether to sell its stake.

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ANOTHER of Singapore's old stockbroking families is set to bow out of the Raffles Place financial district with the $1.79 billion offer by Maybank to buy Kim Eng Holdings.

Ms Gloria Lee (photo), now in her eighties, founded Kim Eng in 1972, a housewife turned broker in a male-dominated industry. She took up broking only after her doctor urged her to keep out of the sun and not play so much golf.

Now Ms Lee's son Ronald Ooi is set to sell his 15.4 per cent stake in Kim Eng to Maybank.

Ms Lee retired in 2008 as chairman, handing the reins to her son, who is Kim Eng's chairman and chief executive and is likely to stay on after the takeover - giving the family some continuing link.

One by one, the great stockbroking families have been making their exit from Raffles Place. Ms Lee's family is among the last to move out.

Veteran investor Denis Distant is unsurprised. 'They have made their money. Now they are saying goodbye, and letting other people try their luck.'

Still, some old-time traders feel nostalgic for a bygone era when stockbroking was dominated by colourful characters like Ms Lee and the late Mr Jacob Ballas who used to run J. Ballas & Co, the forerunner of DBS Vickers Securities. 'The financial industry is full of young financial advisers talking about the alphas and betas on investments. There is none of that colour which makes the heart beat faster any more,' said remisier Thomas Lee.

When she started Kim Eng, Ms Lee made history by becoming one of the first female stockbrokers along with the late Mrs Nancy Lim, who founded Lim & Tan Securities, the remaining independent local brokerage together with Phillip Securities, now that Kim Eng is being sold.

She scraped together $700,000 in savings and bank loans and bought a seat at the stock exchange, naming it Kim Eng - 'Kim' after late husband Lee Kim Yew, and 'Eng', the name of a family friend.

'There was so much noise - shouting out the orders and two boys running around to complete them,' she said in a 1998 interview.

In January 1990, Kim Eng became the first brokerage to be listed on the local bourse, attracting 244,906 investors who put up an eye-popping $22.93 billion for its offer of 45 million shares at 65 cents each. The sum was so huge it caused overnight lending rates to surge to 28 per cent.

After the listing, the firm became a regional financial powerhouse, as it extended its reach to other markets such as Hong Kong and Bangkok.

By becoming the year's first takeover target, Kim Eng may whet investors' appetites for more mergers and acquisitions in the months ahead.

In January 2005, Malaysian lender CIMB spent $239.1 million buying the broking outfit of GK Goh Holdings, another independent financial house founded by Mr Goh Geok Khim who hails from the same era as Ms Lee.

But Maybank is paying a far heftier $1.79 billion for Kim Eng to gain access to its region-wide network. It is a fitting exit for the family of a gutsy matriarch named by Forbes magazine in 1992 as one of Asia's 25 'Power Women'.