The banking firm aims to do so via the proposed acquisition of Inter-Pacific stockbroking business
By DASHVEENJIT KAUR / Pic By MUHD AMIN NAHARUL
Kenanga Investment Bank Bhd (Kenanga IB) intends to expand its remisier base nationwide through the acquisition of Inter-Pacific Securities Sdn Bhd’s stockbroking business.
Group MD Datuk Chay Wai Leong (picture) said the banking firm aims to do so via the proposed acquisition, a move set to be consolidation for the survival among the fittest in the retail broking space.
“We intend to be ahead of the top stockbroker in the country and increase our remisiers by getting Inter-Pacific’s (remisiers) on board,” Chay told reporters on the sidelines after the investment bank’s 43rd AGM in Kuala Lumpur yesterday.
He said Kenanga IB has over 1,000 remisiers nationwide, while Inter-Pacific has around 200.
“Through this acquisitions, Inter-Pacific will come with its five branches across Kuala Lumpur (KL), Penang and Johor Baru, and we will be able to increase our remisiers’ base to over 1,200,” Chay added.
He, however, said the value of the acquisition will be financed by shares of Kenanga IB and cash and has yet to be decided as both firms are still in talks to finalise the amount.
“We are still in negotiation on the value, so, we can’t say anything now without any material developments.
“We are only acquiring Inter-Pacific’s assets, liabilities and contractual arrangements,” he said.
The potential acquisition would further strengthen Kenanga IB’s leading position in the retail brokering space, by becoming the top-two largest stockbrokers in Malaysia, with a combined market share of over 10% and retail market share of about 25%.
Having a larger team of remisiers will allow Kenanga IB to carve a commanding market share among retail investors in the country.
Currently, Kenanga IB is one of the top three brokerage houses with the largest network of remisiers in Malaysia.
The banking firm is also ranked second by trading volume and fourth by trading value year-to-date by Bursa Malaysia Securities Bhd.
In a separate statement earlier this week, Chay noted that Kenanga IB is looking forward to a smooth and fruitful negotiation process, and aims to conclude within the next six months.
In a separate filing to Bursa Malaysia on Monday, the investment firm said Bank Negara Malaysia, in a letter dated May 16, stated that it had no objection in Kenanga IB commencing negotiations with Inter-Pacific.
The central bank requires Kenanga IB to acquire Inter-Pacific’s stockbroking business-related assets, liabilities and contractual arrangements which are to be completed within six months from May 16.
Kenanga IB operates through 32 branches nationwide.
Meanwhile, Inter-Pacific is an indirect subsidiary of Berjaya Capital Bhd, which in turn, is part of the conglomerate, Berjaya Corp Bhd.
Inter-Pacific has five branches across KL, Penang and Johor Baru and a paid-up capital of RM250 million.
Kenanga’s three largest shareholders as at March 30, 2018 were Cahya Mata Sarawak Bhd with a 25.38% stake; Tan Sri Tengku Noor Zakiah with 14.16%; and Tokai Tokyo Financial Holdings Inc with 5.05%.
Kenanga IB has done several other similar proposed acquisitions in the past. Back in 2012, it acquired ECM Libra Investment Bank Bhd for RM875.1 million, of which RM659.61 million was in cash, and the rest in shares and loan stocks.
In that same year, Kenanga IB also acquired ING Funds Bhd, which brought the investment bank to where it is today.