RHB Capital Bhd
(Sept 11, RM6.06)
Maintain hold with an unchanged fair value of RM5.90: RHB Capital Bhd (RHBCap) announced that, in relation to its rights issue, the company on Sept 9 entered into a management and underwriting agreement with RHB Investment Bank Bhd, Affin Hwang Investment Bank Bhd, CIMB Investment Bank Bhd, Credit Suisse Securities (M) Sdn Bhd, Maybank Investment Bank Bhd and Public Investment Bank Bhd to underwrite 250.84 million rights shares, representing approximately 48.45% of the rights issue, for which no undertaking has been obtained from other shareholders of RHBCap. 

The remaining 266.86 million rights shares, representing approximately 51.55% of the rights issue, represent the entitlements of the Employees Provident Fund (EPF) and OSK Holdings Bhd, the substantial shareholders of RHBCap, under the rights issue, for which they have provided written undertakings to subscribe in full to their respective entitlements under the rights issue as at the entitlement date. 

The press further reported that another major shareholder of RHBCap, Aabar Investments PJS, which holds a 21.2% stake in RHBCap, had not taken up its entitlements under the rights issue. Aabar’s possible non-subscription will dilute its stake in RHBCap to 17.6% from 21.2%, based on our estimates. The other major shareholders’ stakes currently are 41.5% by the EPF and 9.9% by OSK. 

The news of Aabar’s possible non-subscription was a surprise to us. While there would be no change in the company’s fundamentals, this may dent sentiments in the stock in our view. We maintain “hold” on RHBCap. — AmResearch, Sept 11

This article first appeared in digitaledge Daily, on September 14, 2015.