The Kuwait Finance House (Malaysia) Bhd consortium currently in negotiations to acquire a stake in Rashid Hussain Bhd (RHB) says it might invest over RM12 billion in the Malaysian finance-based group and create the world’s largest and most innovative Islamic bank through the acquisition.“The consortium could invest in excess of RM12 billion for this project. This will be the largest, single FDI into Malaysia,” it said in a statement Monday to provide an insight into its plans for RHB.
Utama Banking Group (UBG) announced on Jan 16 this year that it has signed a Memorandum of Understanding with Kuwait Finance House for the proposed disposal of UBG’s interest in RHB.
UBG owns 32.5 percent of RHB, which in turns owns 65 percent of RHB Capital. RHB Capital owns unlisted RHB Bank, Malaysia’s fourth largest lender by assets.
On Jan 31, UBG announced that a rival consortium led by Hong Kong-based Primus Pacific Partner Ltd was also keen to negotiate to acquire the RHB shares from its proposed share disposal.
Primus Pacific Partners’ major shareholders include Qatar Investment Authority and the Tsai family, which is behind Taiwan’s fifth largest financial holding company, Fubon Financial.
“Having a global mega Islamic Bank would invite and facilitate more FDIs as well as initiating a positive cycle. It will cement Malaysia’s stature as the eminent global leader in Islamic banking to have the world’s largest, most innovative, and respectable Islamic bank as one of its anchor banks,” Kuwait Finance House said.
Kuwait Finance House, one of the two foreign companies currently operating Islamic banking operations in Malaysia, said its vision in the RHB’s acquisition was to work side-by-side with all Malaysians to jointly own and manage RHB and its subsidiaries to achieve long term, sustainable value creation for all stakeholders.
Kuwait Finance House said it has made a very attractive offer for the entire RHB stake owned by UBG, including shares, warrants and irredeemable convertible unsecured loan stocks (ICULS).
The consortium is also offering UBG the opportunity to participate in an equity interest in the consortium should it decide to ride on the value creation of the eventual mega global Islamic bank. “In addition to the purchase of Utama Banking Group’s RHB stake, it is also the intention of the consortium to clear all outstanding debt at RHB, if this is supported by the shareholders of RHB,” Kuwait Finance House added.
A news report stated that RHB’s debt is expected to expand to RM3.5 billion by end June 2007.
Kuwait Finance House said RHB would not be a foreign-controlled bank but operate as an Islamic brotherhood partnership.
It added that the consortium would also support the Employees Provident Fund’s (EPF) proposed restricted offer for sale of RHB Capital shares or any other proposals by the shareholders in dealing with RHB’s debt as long as it would benefit all shareholders.
It disclosed that it was making the general offer at prices, which would benefit the minority shareholders and would work closely with Malaysian institutional and non-institutional shareholders to create value for the group.
“The consortium has no plans to reduce the workforce of RHB and its related companies since the motivation behind the transaction is to expand into a mega Islamic Bank,” it said.
The consortium also plans to hire more Malaysians to enhance Malaysian human capital base through extensive training in Islamic banking and finance.