PETALING JAYA (Feb 27, 2012): RHB Capital Bhd and OSK Holdings Bhd are expected to announce this week the highly anticipated merger between RHBCap's banking business and OSK Investment Bank Bhd (OSK IB), which would create the country's largest brokerage by trading value and volume, sources said.
"An announcement to Bursa Malaysia will be made later this week, and subject to relevant approvals, the merger transaction would be completed in the first half of this year," a source toldSunBiz.
Earlier, it was reported that the deal will see OSK, built up by veteran stockbroker Ong Leong Huat, injecting its investment banking, wealth management and stockbroking assets into RHBCap, the country's fifth-largest lender. OSK and RHBCap have been in talks since receiving the nod from Bank Negara Malaysia last October.
The value of the deal is being touted at RM1.9 billion to RM2.5 billion, based on OSK IB's net asset value of RM1.25 billion as at December 2010.
The most recent comparative is Malayan Banking Bhd's acquisition of Singapore brokerage Kim Eng Holdings Ltd at 1.9 times price-to-book-value (P/BV), and analysts said the acquisition price of OSK IB should be lower as Kim Eng has a stronger regional presence.
Another comparative is K&N Kenanga Holdings Bhd, which is reportedly close to an agreement to buy the investment banking and broking unit of ECM Libra Financial Group Bhd for RM900 million, or about 1.4 times ECM Libra unit's book value.
Analysts have said the merger of RHBCap, with a market capitalisation of RM16.9 billion, and OSK's RM1.7 billion, would create the largest Malaysian brokerage with a market share of around 15% by trading value and 17% by trading volume as at Sept 30, 2011.
In a Jan 6, 2012 report, HwangDBS Vickers Research Sdn Bhd said a merger with OSK IB would scale up RHBCap's domestic investment banking and broking platform.
The merger would also provide immediate access to capital markets in Singapore via OSK's 51%-owned subsidiary DMG & Partners Securities Pte Ltd, and Indonesia via OSK's 51%-owned subsidiary OSK Nusadana Securities.
RHBCap shares closed eight sen higher at RM7.66 on Friday, while OSK shares added one sen to RM1.76.
