Abu Dhabi's Mubadala sells 3% stake in RHB Bank

The bank is considering selling its 17-storey location in the city-state

PETALING JAYA: Abu Dhabi sovereign wealth fund Mubadala Investment Co has sold off an estimated 3% of its stake in RHB Bank Bhd, following through on its plans to sell its non-core assets to both global and local investors.

The stake sale, via Mubadala’s unit Aabar Investments PJS, breaks staunch resistance where Aabar in the past did not see through the sale of its 17.8% block in RHB Bank, claiming that it wanted to recoup the value of the block.

Sources said Mubadala offered 120.3 million shares or 3% of RHB Bank’s enlarged share capital to be sold through a book-building exercise at a range of RM5.07 to RM5.18 per share.

This represents a 3% to 5.06% discount to the closing price of the RHB stock in a transaction valued at between RM609.9mil and RM623.2mil.

RHB closed 0.4% lower at RM5.34 yesterday, trading on a volume of 468,900 shares.

The joint book runners for the deal are CIMB and JP Morgan.

One dealer said the deal was “well-priced and garnered good interest”.

RHB Bank’s share price has been on the general uptrend in the past one month, up by 4.6% to RM5.48, until it was hit by the recent Turkish lira meltdown.

It was reported in January this year that Mubadala was mulling options for its stake in RHB Bank, which entailed a possible sale.

This is largely in line with Mubadala’s broader review of its portfolio and view that its stake in RHB Bank is non-core.

Aabar is the second-largest shareholder in RHB Bank, followed by OSK Holdings Bhd with 10.13%.

The Employees Provident Fund is the largest shareholder with a 40.7% equity in the fourth-largest bank in Malaysia.

Aabar was formerly owned by the Abu Dhabi government investment vehicle, International Petroleum Investment Corp (IPIC), and later taken over by Mubadala under a restructuring exercise in 2016.

Government-owned entity Abu Dhabi Commercial Bank (ADCB) took up a 25% stake in RHB Bank at 2.3 times book value back in 2008 at a price of US$1.23bil.

In 2011, ADCB sold its stake to sister company, Aabar, for similar valuations, although the market valuations had decreased.

The related-party transaction was made to ensure that ADCB did not have to write down the value in its books.

Aabar was previously associated with controversy-stricken 1Malaysia Development Bhd (1MDB), having held an option to subscribe to equity in the power arm of 1MDB that was subsequently terminated.

This came about after IPIC had provided a guarantee to 1MDB for its US-dollar debt papers to the tune of US$3.5bil to help the latter fund the purchases of both the Tanjong and Genting power plants in 2012.

In 2015, following RHB Bank’s intention to raise RM2.5bil from its shareholders via a rights issue, Bank Negara prohibited Aabar from exercising its voting rights in RHB Bank to anything above 15%, and RHB Bank was also prohibited from issuing more than 15% of new shares to Aabar.