China, Mideast banks eye RHBCap

Abu Dhabi Commercial Bank is looking to sell its 25 per cent stake in RHB Capital as the UAE bank looks to focus on efforts closer to home.

China Construction Bank (CCB) and several banks from the Middle East, including Qatar, are keen on Abu Dhabi Commercial Bank (ADCB)'s 25 per cent stake in local lender RHB Capital Bhd (RHBCap), sources said.

ADCB, the United Arab Emirates' third largest bank by assets, is looking to sell its stake as it looks to focus on efforts closer to home.

Last week, it got four investment banks - Goldman Sachs, Merrill Lynch, JPMorgan and CIMB - to pitch for an advisory role in the stake sale.

It is understood that Goldman Sachs is the frontrunner to win the mandate.

RHBCap's share price rose by 1 sen to close at RM8.03 yesterday following earlier news reports that ADCB was looking to sell its stake. At that price, ADCB's stake is worth some RM4.3 billion.

It is understood that it may prefer a sale of the stake in its entirety to a strategic investor, one of the sources said.

While it is still too early to determine who the potential buyers might be, CCB, China's second largest bank by market value, and several banks from the Middle East have indicated interest, the source said.

RHBCap is undeniably an attractive investment, having grown in size, profit and reach in recent years.

Still, ADCB wants to give up its stake in the lender as it no longer fits with its investment strategy.

During the 2009 Dubai debt crisis, it was one of the region's most exposed banks to debt-ridden conglomerate Dubai World.

"They suffered because of their exposure to Dubai. The thinking now is, why have an investment so far away (in Malaysia) when their own shop needs to be spruced up. So when the time and price are right, they want to realise their investment and re-focus their efforts at home," the source said.

An earlier effort last year at selling the stake was unsuccessful as the price was not right.

Another reason ADCB may be wanting to exit is because of regulatory complications that may arise from having a dual banking presence in Malaysia.

ADCB is owned by the government of Abu Dhabi, whose National Bank of Abu Dhabi was given a commercial banking licence to operate in Malaysia last June.

ADBC paid RM3.9 billion, or RM7.20 a share, for its stake in RHBCap in mid-2008.

RHBCap, the country's fourth largest banking group by assets, saw its net profit breach RM1 billion for the first time in 2008, then move on to an all-time high of RM1.4 billion last year.

It expects to conclude in April its purchase of Medan-based Indonesian lender, PT Bank Mestika Dharma, a move which will let the potential strategic investor have access to that fast-growing, coveted market. - By Adeline Paul Raj of btimes.com.my