On CIMB’s Acquisition Of KAF And Disposal Of Broking Houses

The disposal of CIMB’s remaining stakes in its stockbroking businesses is expected to be neutral on the group’s earnings. Maybank in its report it awaits further developments with regard to the expected acquisition of KAF Equities.

Disposes remaining 25% stakes for MYR780m CIMB has fully divested its remaining 25.01% and 25.0% shareholding in
CGS-CIMB Securities International Pte Ltd (CSI) and CGS-CIMB Holdings Sdn Bhd (CCH) respectively, to CGS International Holdings Ltd (CGSI; formerly known as China Galaxy International Financial Holdings Ltd). CIMB will receive about MYR780m from this sale, taking the total proceeds for the sale of its 100% original stockbroking business to about MYR2.5b.

A brief background
Investors will recall that in 2018, CIMB entered into a 50:50 partnership agreement with CGSI to operate a regional stockbroking business in Asia, through the sale of CIMB’s stockbroking business into the CGSI-CIMB JV. In Dec 2021, CIMB sold 24.99% and 25% of its shareholding in CSI and CCH respectively to CGSI, under the latter’s first call option. With this second disposal, CIMB will not have a stockbroking entity within the group for now, at least until the potential acquisition of KAF Equities is finalised.

Neutral financial impact
Maybank said it does not expect a P&L impact from this disposal, as CIMB had fully recognised all potential gains earlier on. There could be some uplift to capital from the sale, but we expect this to be largely offset by the potential acquisition of KAF Equities.

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