Malaysia: Khazanah may offload holding in Bank Muamalat, ahead of merger

Malaysias second Islamic bank set up in 1991.

State investment fund Khazanah Nasional Bhd is expected to dispose off its entire 30 per cent interest in Bank Muamalat to major shareholder DRB-Hicom Bhd ahead of the proposed merger between Bank Muamalat and Malaysia Building Society Bhd (MBSB) materialises, analysts opine.

An analyst at an investment bank said, there is little reason for the government-backed strategic investment fund to continue to hold the stake in Bank Muamalat as its shareholding would be diluted after the completion of the merger, local media The Malaysian Reserve reported.

“It makes sense for Khazanah to sell especially since its holdings would diminish in the merged entity. There is no point holding on (to the stake),” the analyst told the local paper.

The analyst also believes that it would not be a problem for DRB-Hicom which already owns 70 per cent interest in Bank Muamalat to purchase Khazanah’s interest should the fund decide to sell its stake.

Khazanah managing director Azman Mokhtar had told reporters that it would wait for the outcome of the merger talks before deciding what to do with its stake.

RHB Research banking analyst David Chong said, assuming 624 million new MBSB shares are issued at MYR1.50 a share for the merger, DRB-Hicom’s interest in the new merged entity would dwindle to 13 per cent while Khazanah’s interest would fall to just 5 per cent.

Early this month, MBSB announced that it had received the nod from Bank Negara Malaysia to begin discussions on a possible merger with Bank Muamalat.

MBSB, the non-bank financial institution, has been on the lookout for a possible merger target to expand its aspiration to become a full-fledged Islamic bank.

The proposed MBSB-Bank Muamalat merged entity would have assets worth MYR62.1 billion and would become the country’s second-largest Islamic bank, after Maybank Islamic which has MYR160.9 billion in assets.

Related stories:

Malaysia’s Khazanah holds off decision on Bank Muamalat stake

Malaysia: MBSB to commence merger talks with Bank Muamalat

MBSB to become full-fledged Islamic bank, via merger with Bank Muamalat

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.