MBSB to engage PNB on acquisition of MIDF

The announcement comes on the heels of other big potential M&As 


MERGER and acquisition (M&A) activity in corporate Malaysia has heightened with Malaysia Building Society Bhd (MBSB) the latest to state its intentions to hold talks with Permodalan Nasional Bhd (PNB) on the possible acquisition of Malaysian Industrial Development Finance Bhd (MIDF) from the latter. 

The announcement comes on the heels of other big potential M&As involving telecommunication companies DiGi.Com Bhd and Celcom Axiata Bhd as well the multibillion ringgit proposed takeover of four toll highway concessionaires by Amanat Lebuhraya Rakyat Bhd. 

Read more: MBSB gets BNM’s nod to start discussion with PNB to acquire MIDF

According to a filing to Bursa Malaysia yesterday, MBSB noted that the central bank had stated no objection for MBSB to commence discussions with governmentlinked investment company (GLiC) to explore the possibility of undertaking an acquisition of its 100% stake in the investment bank. The approval is valid for a period of six months. 

“MBSB’s interest in MIDF could be strategic as the latter has expertise in investment banking and wealth management which will fit with MBSB’s growing retail and wholesale Islamic banking business,” an analyst with a local brokerage said. 

For PNB, this is a fresh chance to monetise its interest in MIDF, after the failed merger bid with Al-Rajhi Banking and Investment Corp (M) Bhd in 2019.

Al-Rajhi had planned to acquire a 70% stake in MIDF for about RM1.7 billion according to news reports but the talks failed after Al-Rajhi and MIDF failed to come to an agreement.

MBSB is majority owned by the Employees Provident Fund, another GLiC. 

The finance company acquired Asian Finance Bank Bhd in 2018 to get into Islamic banking and rebranded into MBSB Bank Bhd. It has become Malaysia’s secondlargest full-fledged Islamic bank with assets worth RM43.7 billion. 

MBSB currently provides Shariah-compliant products and services which include consumer banking, business banking and trade financing. 

It is also building its transactional banking, such as fee-based income and trade finance, increasing their assets and developing their financial technology capabilities to attract more customers. 

MBSB’s share price closed four sen higher at 64 sen on the news yesterday. 

PNB could also be looking to reward its unit trust holders with proceeds from the MIDF sale after its investment in oil and gas services company, Sapura Energy Bhd, has suffered under losses. 

Sapura Energy is cash strapped and facing legal action from its subcontractors and suppliers to settle outstanding payments.