CIMB sells 50% of international securities arm to China Galaxy, in talks on Malaysian partnership

PETALING JAYA: CIMB Group Holdings Bhd is disposing of a 50% stake in CIMB Securities International Pte Ltd (CSI) to China Galaxy International Financial Holdings Ltd (CGI) for SG$167 million (RM515 million).

Besides that, both parties are in discussions for a partnership in Malaysia’s stockbroking business.

CIMB said in a filing with the stock exchange yesterday that its wholly owned subsidiary CIMB Group Sdn Bhd yesterday signed a conditional share purchase agreement with CGI, a wholly owned subsidiary of Hong Kong-listed China Galaxy Securities Co Ltd, for the disposal.

The disposal sum was derived from on a multiple of 1.3 times of CSI’s consolidated net asset value of S$256.9 million as at Dec 31, 2015.

Following the disposal, CIMB and CGI will have an equal stake in CSI, which is the holding company for the cash equities business comprising institutional and retail brokerage, equities research and associated securities businesses in Indonesia, Singapore, Thailand, Hong Kong, India, South Korea, the UK and the US.

CIMB said the proposed disposal marks the formation of a strategic partnership between the group and China Galaxy.

“With this partnership in the cash equities business, the joint venture will be able to leverage on the strengths of China Galaxy, including its network, market access as well as business and technological know-how, as it is one of the top securities companies in China,” it noted.

WIth the signing of the ex-Malaysia share purchase agreement, both parties will work towards obtaining the necessary regulatory approvals with an expectation to complete the deal by year-end.

The proposed disposal is expected to contribute positively to the earnings of CIMB group.
Its CEO Tengku Datuk Seri Zafrul Tengku Abdul Aziz said CIMB’s stockbroking business will effectively be repositioned as a pure-play broker with the client base of a universal Asean bank.

He said with China’s Belt and Road initiative expected to facilitate growth, consumption and capital flows into the region, the joint venture is poised to further capitalise on China-outbound mergers and acquisitions, China-Asean cross-border investments and infrastructure funding.