KUALA LUMPUR (Oct 8): A corporate development is brewing at Public Bank Bhd (KL:PBBANK), sources say, with the country’s third-largest banking group by assets believed to be undertaking a potential acquisition of a related company.
While it is not immediately clear which company it is, industry sources say the development may be in relation to LPI Capital Bhd (KL:LPI).
Main Market-listed LPI Capital wholly owns Lonpac Insurance Bhd, a leading general insurance provider in Malaysia.
LPI Capital’s latest annual report shows that, as at Jan 24, Consolidated Teh Holdings Sdn Bhd held a 42.74% stake (or 170.27 million shares) in the insurer.
Consolidated Teh Holdings is the private investment vehicle of the late Tan Sri Teh Hong Piow, the founder of Public Bank Bhd. Teh passed away in December 2022.
Based on LPI’s share price of RM12.80 at the time of writing, Consolidated Teh Holdings' stake in the insurer was worth RM2.18 billion. Teh had also held a direct 1.31% stake in LPI Capital.
LPI Capital’s other major shareholder is Sompo Japan Insurance Inc, with a 7.76% stake.
Public Bank is expected to hold a press conference on Friday (Oct 11) morning, according to an invitation sent to the media Tuesday.
Public Bank managing director and CEO Tan Sri Tay Ah Lek and “a few key stakeholders” will be sharing important updates and information related to a “major announcement”, the invitation said.
The late Teh held all the shares in Consolidated Teh Holdings with the exception of one share, held by a Tay Mui Leng, according to CTOS data.
Tay and Diona Teh Li Shian (Teh’s youngest daughter), along with a Chua Siew Chuan and Cheng Chia Ping, were listed as directors/officers of Consolidated Teh Holdings.
Public Bank’s biggest shareholder is Consolidated Teh Holdings with a direct holding of 21.64%. Based on the bank’s latest annual report that cited shareholding data as at Feb 29, the estate of the late Teh held a direct 0.64% stake in the bank but a total interest of 23.41%. LPI Capital held a direct 1.1% stake in the lender.
Lonpac is LPI Capital’s operational arm for the group’s insurance activities in Malaysia and Singapore. In Cambodia, LPI Capital has a 45% stake in Campu Lonpac Insurance plc.
LPI Capital made a higher net profit of RM313.73 million for the year ended Dec 31, 2023 (FY2023) compared with RM252.22 million the year before. This was on the back of a 16.5% increase in operating revenue to RM1.9 billion.
For the first half ended June 30, 2024, its net profit came in 30.7% higher to RM179.29 million. In the notes accompanying its financial statements, LPI said the government's boosted spending in the semiconductor industry, building manufacturing capabilities and expanding public infrastructure are expected to increase demand for insurance services in the coming quarters.
"The LPI group will leverage its established agency network, insurance brokering partners and extensive global partnerships to tap into the expanding insurance business," it said. It also said it would continue to promote wider adoption of digital solutions to enhance efficiency and improve customer experience.
Public Bank also holds a 30% stake in AIA Public Takaful Bhd.
LPI’s share price of RM12.80 at the time of writing gives the company a market capitalisation of about RM5.1 billion. The shares were up by two sen from their Oct 7 closing of RM12.78.
Public Bank shares were unchanged at RM4.56 at the time of writing, giving the company a market cap of about RM88.5 billion.