BTMU divests CIMB stake

Largest-ever block trade in Malaysia's capital markets history

THE Bank of Tokyo-Mitsubishi UFJ (BTMU), the banking entity of Mitsubishi UFJ Financial Group (MUFG), has sold its entire stake in CIMB Group in an overnight block trade that raised 2.6 billion ringgit (US$610 million).

The trade involved over 412.50 million existing CIMB shares – or about 4.6% of the total outstanding shares – at 6.20 ringgit per share. This represented a 4% discount to the closing price on the book building date on September 19, or above the mid-point of the discount range of between 2.5% and 4.80% (6.15 ringgit to 6.30 ringgit per share).

The block trade was the largest-ever in Malaysia’s capital markets history and the fifth-largest in Asia-Pacific, outside of Japan, in year-to-date 2017. The BTMU divestment is part of MUFG’s strategic global master plan that included a review of existing investments in its affiliates. It says MUFG is proceeding optimization of capital management in the face of tightened international financial regulations and changes in business environment.

The block trade was multiple times oversubscribed with over 70 investors participating in the book build process. There was strong support from government funds, domestic long-only funds, and international institutions, including a mix of new and existing shareholders. The top 10 investors received about 67% of the allocation.

Overall, 70% of the deal was distributed to international investors and 30% to domestic investors. By type of investors, 66% was taken by multi-strategy and 34% by long-only funds.

CIMB’s stock price has surged by over 40% in the past 12 months, recording a 52-week high of 7.08 ringgit in August 2017 after posting a strong performance in the first half of fiscal year 2017.

CIMB Group achieved a 35.3% rise in net profit to 2.28 billion ringgit, with the performance driven by loans growth across segments, improvements in net interest margin and better performing capital markets. Cost-to-income ratio improved to 52.5% – from 55.4% in the first half of 2016 – with continuous cost management discipline. CASA ratio was at 35.6% with sustained deposit initiatives and posted an increase of 10.5% year-on-year.

Despite the divestment, BTMU says it is currently collaborating with CIMB in broad ranging areas and there will be no change in the status of CIMB as one of its alliance partners in the Asean region.

CIMB, Credit Suisse and Morgan Stanley acted as the joint bookrunners for the transaction.


22 Sep 2017


Capital Markets

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