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****Investment Philosophy, Strategy and various Valuation Methods****
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Shares of Malayan Banking Bhd (Maybank) dropped as much as 0.67 percent after the largest bank by assets in Malaysia said it would raise US$1.2 billion with a new share offer to fund growth in the country and its regional subsidiaries.
“This sounds logical to us as Maybank may be required to bring in capital if it is required to locally incorporate its Singapore subsidiary, which currently holds a qualified full banking licence,” HwangDBS Vickers Research said in a note on Monday.
Maybank said on Monday it completed the bookbuilding exercise for the private placement, the largest so far in Malaysia’s corporate history.
The placement is a proactive move to boost Maybank’s equity capital ahead of the implementation of the stringent new solvency requirements of the Basel III global banking regulations, Maybank said in a statement.
The issue price was fixed at RM8.88 a share, Maybank said, while the total number of shares to be issued represents 4.98 percent of the enlarged issued and paid-up share capital of Maybank as at Sept. 30.
The private placement exercise is expected to be completed no later than the middle of October, added Maybank.
HwangDBS maintained its "buy" rating on Maybank stock with a target price of RM11.10.
“Maybank remains our top pick and we believe our investment thesis of high dividends and strong earnings momentum remains intact despite these developments,” said HwangDBS.
The stock was down 0.56 percent at RM8.94, underperforming the broader index’s 0.15 percent drop.
Maybank plans US$1.2b share offer, says IFR
October 05, 2012
HONG KONG, Oct 5 — Malayan Banking Bhd (Maybank), the country’s largest lender, is seeking to raise up to US$1.2 billion (RM3.7 billion) with a new share offer, capital markets news service IFR said today.
Banks in Southeast Asia are beefing up core capital to accommodate the rapid growth in lending in the region and to meet the stringent new solvency requirements of the Basel III global banking regulations.
The fund raising comes just a week after sources told Reuters that Maybank was among the potential bidders approached by US conglomerate General Electric Co to sell its US$1.6 billion stake in Thailand’s Bank of Ayudhya. .
Maybank is offering 300 million new shares, in a range of 8.8-8.9 ringgit each, a discount of up to 3 per cent to the average trading price over the previous five days, said IFR, a Thomson Reuters publication, citing a term sheet for the sale.
Maybank’s shares closed today at 8.99 ringgit, trading on a price-to-earnings ratio of around 12.56, which compares with a median of 12.32 for all Malaysian banks.
The new funds will be used to strengthen the company’s capital base, support its “growth objectives” and meet the Basel III capital requirements, IFR said.
The offer can be expanded by an additional 112 million shares depending on the strength of demand, it added.
Maybank’s offering adds to Malaysia’s flourishing capital market deals this year with the tally for share offers at US$7.3 billion, accounting for nearly one-quarter of all new listings in Asia-Pacific and well up from about US$1.8 billion in Malaysia in the same period last year.
Maybank and UBS are managing the share offer, IFR added. — Reuters