In a bourse filing, Affin Hwang IB, on behalf of parent company Affin Bank Bhd, said it had entered into a conditional share sale and purchase agreement with Starlight Asset Sdn Bhd, an investment holding company incorporated by funds managed by CVC Capital Partners, for the proposed divestment for a provisional cash consideration of RM1.54bil.
The transaction values Affin Hwang AM at RM2.25bil based on 100% equity interest.
Under the proposal, Affin Hwang IB would dispose of seven million shares or 63% stake in the Affin Hwang AM while the selected key senior management will sell 594,338 units or 5.35% stake.
"The Group will recognise profit from divestment of RM1,072.2 million for the sale of its 63% stake in AHAM to CVC.
"The disposal will allow the Group to realise a premium based on the consideration, which represents a historical Price to AUM and PE multiple of 3.1% and 19.7 times respectively, based on AHAM’s audited financial statements for the financial year ended 31 December 2020.
"The divestment is expected to enhance the Group’s Common Equity Tier 1 ratio by 289 basis points, based on the Group’s audited financials for the financial year ended 31 December 2020," it said in a statement.
The group said it will channel the gains towards working capital requirements to grow its core banking business. The transaction is expected to be completed in the third quarter of 2022 and is subject to shareholders approval of Affin Bank and relevant regulatory approvals.
"This disposal is very much in line with our plans to focus and grow our banking business and expand our loan portfolio which we can leverage 10 times from the gains of the divestment.
"Our enhanced capital ratios will put us in a strong position to implement our long-term business plan and catapult the Group’s position for our A25 Plan to achieve total loans and financing of RM90bil by end 2025. As at 30 September 2021, our total loans and financing stood at RM49 billion," said Affin Bank president and group CEO Datuk Wan Razly Abdullah Wan Ali.
Upon completion of the proposed divestment, Affin Hwang AM will cease to be a subsidiary of Affin Hwang IB and the financial results of Affin Hwang AM will be deconsolidated from Affin Bank and its subsidiaries’ consolidated financial statements.
Affin group acquired a 70% stake in Affin Hwang AM in 2014 when it acquired Hwang-DBS. The business has grown from assets under management of RM30bil as at end-2014 to RM81bil as at end-2021 under its management team.