PETALING JAYA: BIMB Holdings Bhd’s private placement to raise RM800mil, which it plans to undertake as part of a group-wide restructuring, will now take place when the market improves.
Chief executive officer Mohd Muazzam Mohamed told StarBiz he is mindful that raising funds in a bear market would be challenging.
“The placement exercise will be done once approval is obtained from Bank Negara and when the market is conducive, ” he said in an e-mail reply when asked on the status of BIMB’s restructuring exercise.
In December last year, BIMB announced a series of proposals to unlock value for shareholders and see the transfer of its listing status to Bank Islam Malaysia Bhd through a share swap scheme.
For this, it had to first undertake a private placement of new shares to raise RM800mil to settle an outstanding sukuk held by parent Lembaga Tabung Haji, which controls 53.5% of the group.
Muazzam said the weak market has not derailed the group’s plan to unlock Bank Islam’s value but timelines for the various proposals could be pushed back.
“We have submitted the proposal to Bank Negara and it is still under their purview.
“With the ongoing movement control order (MCO), we anticipate a response by the central bank sometime in May. Nevertheless, we understand that the current situation is an unprecedented, hence, decisions are, of course, subject to the duration of the MCO, ” Muazzam, who is also Bank Islam CEO, said.
Nevertheless, he remains positive on an upturn in the economy and hopes to complete the exercise “between fourth quarter this year to first quarter of 2021.”
BIMB had initially targeted to complete the corporate exercise by the third quarter of this year.
In a report yesterday, Maybank IB said that at the current share price, it estimated BIMB would have to offer 255 million new shares to raise the planned RM800mil, which is 30% more than the 196 million new shares it would have needed to offer when the announcement was first made. The research firm said this would enlarge the group’s existing share capital by 14% as opposed to 11% initially.
“Nevertheless, we do still take the view that the restructuring is positive in unlocking the value of Bank Islam, which we believe is undervalued at this stage, ” said Maybank IB, which is maintaining a “buy” call on the stock with a 12-month target price of RM4.
However, in view of the slower economy, the research firm said it has cut BIMB’s earnings and projected a 14% decline in net profit this year. For financial year 2021, it anticipates a growth of 4%.
In terms of lending, Maybank IB said, “management’s targets for 2020 include loan growth of 5%-6% and deposit growth of 3%-5% (from 5%-7% previously).”
Net interest margins are expected to compress and for every 25-basis-point cut in overnight policy rate, income would be affected by RM60mil to RM70mil.
Meanwhile, Syarikat Takaful Malaysia Keluarga Bhd (STMB), which is 59.5%-owned by BIMB, is looking at single-digit earnings growth, the research firm said.
Besides Bank Islam assuming the listing status of BIMB, the proposed restructuring would also see STMB being listed as a separate entity on Bursa Malaysia.
Shares in BIMB closed 3 sen down to RM3.37, while STMB traded 9 sen higher to RM4.54 yesterday.
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