TWO major developments relating to Apex Equity Holdings Bhd ’s proposed merger with Mercury Securities Sdn Bhd took place over the week, effectively placing ACE Investment Bank Ltd in a quandary.
ACE Investment, an offshore financial institution incorporated in Labuan owned by ACE Holdings Bhd, had bought into Apex, and emerged as the largest shareholder with a 25% stake in the stockbroking company, since September 2017.
But ACE Investment has had issues with getting the green light from financial regulators to remain in Apex. This, in part, is due to the fact that financial institutions such as stockbrokers are required to have major shareholders who could fulfil the “fit and proper test” of the Securities Commission (SC).
ACE Group, which was sanctioned by the SC last year for breach of capital market rulings by providing false or misleading information in 2015 and 2018 , clearly had issues fulfilling the requirements to be a a major shareholder in Apex.
Hence, in a seeming move to address the thorny shareholding issue that had been hanging over the company, Apex in September 2018 entered an agreement to merge with Mercury.
In a nutshell, the deal would involve Apex acquiring Mercury’s stockbroking, corporate advisory and other related businesses for RM140mil, and then transferring them to its unit, JF Apex Securities Bhd. And if the proposed deal materialised, Mercury would become the single largest shareholder in the merged entity with a 31% stake.