Monday 17 Jun 2024
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This article first appeared in The Edge Malaysia Weekly on March 6, 2023 - March 12, 2023

THE emergence of Lee Thiam Wah (pic), founder of retail chain 99 Speedmart, as a substantial shareholder of Alliance Bank Malaysia Bhd last month has piqued the interest of many. While some wonder if there may be more than meets the eye with his move to raise his stake a little past 5%, sources close to Lee say it is purely for the purpose of investment as he believes in the bank’s prospects.

A stock exchange filing on Feb 10 showed that Lee, through his investment vehicle Global Success Network Sdn Bhd (GSN), acquired 1.38 million of Alliance Bank’s shares on the open market on Feb 9 at an undisclosed price. This lifted his stake in the lender to 5.076% (or 78.57 million shares) and solidified his position as the third-largest shareholder of Alliance Bank, after Verticle Theme Sdn Bhd (29.06%) and the Employees Provident Fund (10.43%).

Industry observers note that it is rare for individual investors to hold more than 5% interest in a Malaysian bank through the accumulation of shares on the open market, given that they would come under Bank Negara Malaysia’s scrutiny.

The central bank requires any person who intends to hold 5% or more of a bank’s shares — even if it is through accumulation of shares on the open market — to obtain its approval beforehand. Bank Negara would need to assess if the person is a “suitable” shareholder, as per the requirements set out in its policy document on shareholder suitability issued in August 2016. In general, the person would have to be of integrity, good reputation and sound financial position. If deemed suitable, the person would continue to be held up against Bank Negara’s shareholder suitability criteria on an ongoing basis.

Under section 92 of the Financial Services Act 2013 (FSA), no individual is allowed to hold more than 10% interest in the shares of a bank. The only exceptions to this rule would be those whose shareholding had already exceeded this threshold when the FSA came into effect in 2013. These included Tan Sri Azman Hashim of AMMB Holdings Bhd, who currently has 11.83% interest in the banking group; Tan Sri Quek Leng Chan of Hong Leong Bank Bhd (64.51%) and the late Tan Sri Teh Hong Piow of Public Bank Bhd (23.4%).

“An investment in a bank is not a typical financial investment as it is so tightly regulated,” a banking legal expert remarks.

Hence, it is no surprise that some wonder if Lee’s investment in Alliance Bank is a strategic move.

“There’s so much buzz about him becoming a substantial shareholder. People are wondering if he exceeded the 5% threshold by mistake, if at all that is possible. Also, given Alliance Bank’s fragmented shareholding, some wonder if he may be a [friendly party] to other key individual shareholders,” states a banking analyst.

Lee declined to comment when contacted.

Vertical Theme is 51%-owned by Langkah Bahagia Sdn Bhd, while the remaining 49% is held by Duxton Investments Pte Ltd, whose ultimate shareholder is Singapore state-owned investment firm Temasek Holdings Ltd.

Langkah Bahagia is 33.68%-owned by Richard Ong Tiong Sin (who runs private equity firm RRJ Capital), while corporate adviser Seow Lun Hoo and Singapore hotelier Ong Beng Seng hold 33.16% each. They bought their shares in April 2016 from Lutfiah Ismail, an associate of former finance minister Tun Daim Zainuddin. At the time, analysts said the three were believed to be parties friendly to Temasek and, as such, corporate developments down the road could not be discounted.

Sources note that Lee began acquiring shares in Alliance Bank at the onset of the Covid-19 pandemic in 2020, when bank shares took a beating. According to the bank’s 2020 annual report, Lee — through GSN — was the eighth-largest shareholder as at June 15, 2020, with a 1.48% stake (22.9 million shares).

He went on to accumulate more shares and ended up as the third-largest shareholder, holding 4.8% (74.23 million shares), as at June 30, 2021, the bank’s 2021 annual report shows. His shareholding then crept up to 4.83% (74.82 million shares) as at May 25 last year, based on the latest annual report.

“It [his investment] was a build-up over years, not something that happened overnight,” one source points out.

A company search on CTOS shows that Lee owns GSN almost entirely, with only one share belonging to his wife, Ng Lee Tieng. The company made a net profit of RM13.81 million in the financial year ended Dec 31, 2021 (FY2021), down 70% from RM46.22 million a year earlier. Revenue fell 14.6% to RM124.95 million from RM146.35 million in FY2020.

It made a loss of RM126,502 in FY2018, before returning to the black in FY2019 with a net profit of RM470,574.

Alliance Bank shares, which have gained 6.8% over the last 12 months, closed at RM3.44 last Thursday, giving the lender a market capitalisation of RM5.3 billion. At that price, Lee’s stake in the bank is worth RM270.3 million.

Wheelchair-bound Lee’s rags-to-riches story is a well-documented and inspiring one as he beat the odds of a physical disability — he suffered from polio as an infant — and lack of higher education to emerge as a successful entrepreneur.

Lee, who turns 59 next month, started out in business selling snacks by the roadside before eventually saving enough to start a sundry shop at the age of 23, which launched his career in the retail industry. By Nov 25, 2021, 99 Speedmart had launched its 2,000th outlet, according to its website.

In 2015, Lee acquired the Burger King fast-food chain in Malaysia and Singapore from Ekuiti Nasional Bhd for RM74.6 million. He partnered with Datuk Chua Tia Guan, through their investment firm Newscape Capital Sdn Bhd, for that venture. Chua is Asia Business Centre’s head of tax and financial consulting.

Lee was part of a consortium that included Singapore-listed wealth management firm iFast Corp Ltd and army credit cooperative Koperasi Angkatan Tentera Malaysia Bhd that had tried to secure a digital banking licence in Malaysia.

Through GSN, Lee has a 15.77% stake in Radiant Globaltech Bhd, making him the third-largest shareholder in the retail technology solutions provider.

GSN also has a 17.73% stake in digital solutions provider J&C Pacific Sdn Bhd.

 

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