RHB: Still too early to tell if mega merger will involve VSS

KUALA LUMPUR: The proposed merger of RHB Capital Bhd (RHBCap), CIMB Group Holdings Bhd and Malaysia Building Society Bhd is still in its early days to determine if a voluntary separation scheme (VSS) would be on the cards for employees.
RHB Investment Bank Bhd (RHB IB) managing director and CEO Mike Chan reiterated that the RHB group has entered into an 90-day exclusivity agreement to negotiate on the proposed merger and it is at the beginning stage, with a lot of economic terms to be ironed out.
"It is still too early to tell because both sides are actively looking at the numbers," said Chan when asked if the merger, if materialises, would involve a VSS for RHB employees.
He was speaking at a press conference at the launch of the RHB-OSK Pre-IPO and Special Situation Fund 2 here yesterday.
As of December 2013, RHB group's total headcount for full time employees stood at 16,692.
Chan said the merger teams are actively crunching the numbers to decide what is good for employees and shareholders.
"The key thing is that this merger should create value for both employees and all stakeholders," added Chan.
On July 10, 2014, CIMB, RHBCap and MBSB announced that it has the go-ahead from Bank Negara Malaysia to commence discussions with the aim of merging the businesses of both RHB and CIMB as well as creating an enlarged Islamic banking franchise with MBSB.
The merger, which will create the largest banking group in the country, is expected to see an overlap between RHBCap and CIMB in the investment banking and retail space.
Meanwhile, RHB IB's subsidiary RHB Asset Management Bhd targets to achieve a fund size of RM200 million for the RHB-OSK Pre-IPO and Special Situation Fund 2, a fund that taps and invests into private equity and special situation investments.
Chan said the RHB-OSK Pre-IPO and Special Situation Fund 2 is structured as a close-ended unit trust fund with a charter life of five years. It is a wholesale feeder fund investing in the shares of the RHB-OSK Pre-IPO and Special Situation Fund in Singapore.
"We're targeting a long term capital appreciation of 15% to 20% internal rate of return per year from this fund over the next five years," he said.
It employs a unique private equity strategy that combines growth capital, pre-IPO and special situations investment with hybrid debt and equity features.
"The combination of the pre-IPO investments and special situation investments offers a unique hedge on market conditions. During an up-market environment, the pre-IPO creates strong return opportunities while during a down-market situation, the hybrid debt or equity investment can command higher yield with downside protection and upside sharing opportunities," Chan said.
The RHB-OSK Pre-IPO and Special Situation Fund 2 was offered for subscription on July 22, 2014 and will be available until Sept 4, 2014 to qualified investors with a minimum investment of RM50,000 with each unit costing RM1.
The master RHB-OSK Pre-IPO and Special Situation Fund was launched in April 2014 and has a fund size of US$100 million, targeting a portfolio of 15 investment projects in Asean.