This article first appeared in The Edge Malaysia Weekly on January 13, 2025 - January 19, 2025
MBSB Bank Bhd (KL:MBSB) is exploring options for its asset management business, MIDF Amanah Asset Management Bhd, and this could include an outright sale, according to at least three industry sources.
The bank is understood to have issued a request for proposal (RFP) last month to potential suitors.
“The RFP is to look at options, which could include getting a strategic [equity] partner to come in and beef up the business. If there’s a good proposition, it may consider an outright sale. It’s looking at all options,” one of the sources tells The Edge.
MBSB is the country’s second largest standalone Islamic bank after Bank Islam Malaysia Bhd (KL:BIMB). It inherited the asset management business following its RM1.01 billion acquisition of Malaysian Industrial Development Finance Bhd (MIDF) from Permodalan Nasional Bhd (PNB) in October 2023.
MIDF Amanah Asset Management is, however, a relatively small player, with assets under management (AUM) of under RM1 billion.
“It’s considered a non-core and sub-scale business for MBSB and that may be why it’s looking to sell it,” a source says.
It is still early days, but at least three parties, including Affin Bank Bhd (KL:AFFIN), are said to be keen on MIDF Amanah Asset Management. “The other two are foreign players,” an industry source tells The Edge.
According to the source, Affin has been looking for a “small” asset management business to acquire. It has held unofficial talks with a few asset management company owners apart from MBSB to gauge their interest in selling, the source adds.
Back in July 2022, Affin sold its entire 63% stake in its asset management business Affin Hwang Asset Management Bhd (AHAM) — then the country’s third largest asset management firm — to private equity group CVC Capital Partners for a handsome sum of RM1.42 billion.
Although AHAM was a strong contributor to Affin’s earnings at the time, the offer from CVC was considered too good to pass up, bank officials said then. The offer came at a time when Affin was in urgent need of capital to fund its Islamic banking business.
It would make sense for Affin to have an asset management business again, given its recent new focus on the ultra-high-net worth market, a banking analyst says. “It would complement this strategy,” he tells The Edge.
Last month, The Edge reported, citing sources, that Affin — newly backed by the Sarawak government as its largest shareholder with a 31.25% stake — was seeking opportunities to grow bigger via acquisitions. These could include complementary or related businesses such as insurance, takaful or asset management.
As it stands, most banking groups either fully or partly own an asset management business, to be able to provide clients with a full suite of offerings.
The AHAM transaction in 2022 valued the firm in its entirety at RM2.25 billion, which translated into a price-to-AUM of 3.08%, above the average of 2.64% for past mergers and acquisitions (M&A) deals involving asset management companies since 2014. On a price-earnings ratio basis, the deal was valued at a multiple of 19.7 times compared with the past average of 15.2 times. At the time, AHAM had AUM of about RM80 billion.
More recent M&A transactions in Malaysia include Malayan Banking Bhd’s (KL:MAYBANK) acquisition of the remaining 20% stake it did not already own in Maybank Asset Management Group Bhd from its largest shareholder PNB for RM70.4 million in a related-party transaction that was completed in February 2024.
In late 2023, M&A Equity Holdings Bhd acquired a 75% stake in Value Partners Asset Management Malaysia Sdn Bhd from Hong Kong-headquartered Value Partners Group Ltd for RM2.75 million.
According to the Securities Commission Malaysia’s 2023 annual report, the fund management industry had total AUM of RM975.5 billion in 2023, rising 7.6% from RM906.5 billion in 2022.
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