AMMB private placement oversubscribed


AMMB Holdings Bhd has fixed its issue price for 300 million private placement shares at RM2.75 each.

In a filing to Bursa Malaysia yesterday, the bank said the issue price represented a discount of 7.44% to the five-day volume-weighted average price of AMMB shares up to and including April 2, 2021, being the market day immediately before the price-fixing date, of RM2.9711 per AMMB share.

“The company is pleased to announce that the proposed private placement has been oversubscribed, generating interest from a strong group of diverse investors.

“This demonstrates the confidence of the investing community on AMMB’s resilience to provide a stable earnings growth for all stakeholders,” it said.

AMMB disclosed its private placement plan last week, which according to RAM Rating Services Bhd (RAM Ratings) would not affect the company’s ratings in the immediate term.

“While credit positive, the planned private placement is not sufficient to restore the group’s loss absorption buffer to pre-1Malaysia Development Bhd (1MDB) settlement level,” it said.

The proposed private placement of 300 million new shares represents 9.97% of its existing share capital.

RAM Ratings in early March downgraded AMMB’s ratings to AA3/Stable/P1 from AA2/Stable/ P1 to reflect the adverse financial impact of its RM2.83 billion global settlement with the Malaysian government in relation to the group’s historical dealings with 1MDB.

AMMB proposed to undertake a private placement to mitigate the impact of capital erosion attributed to the global settlement.

Scheduled to be completed by the second quarter of this year, the fresh capital could add about 70 basis points to the group’s common equity tier-1 capital ratio, which would lift the metric to around 12% as at end-December 2020.

“If successfully implemented, the placement will strengthen the group’s loss absorption buffer, enabling it to better withstand anticipated asset quality headwinds and elevated credit costs affecting Malaysian banks in general,” RAM Ratings said.