KUALA LUMPUR (March 21): Alliance Bank Malaysia Bhd (KL:ABMB) is making a cash call to its shareholders.
The banking group, whose share price has climbed roughly 49% over the past 12 months, wants to raise as much as RM600 million in fresh capital via a rights issue of new shares primarily to fund its general banking, financing and investing activities.
In a bourse filing on Friday, the lender said the entitlement basis and issue price of the new ordinary shares will be determined and announced at a later date. Under the exercise, shareholders will have the option to either fully or partially subscribe to their entitlements or renounce them.
Alliance Bank's share price closed at RM5.09 on Friday, giving it a market capitalisation of RM7.87 billion. Based on its issued share capital of 1.5481 billion shares, a back-of-envelope calculation shows that the rights issue will be at 38.7 sen per share on the basis of one rights share for every existing share.
The bank’s major shareholder Vertical Theme Sdn Bhd (VTSB) has provided an irrevocable undertaking to subscribe in full for its entitlement under the exercise. VTSB holds a 29.06% stake in Alliance Bank. Based on a back-of-the-envelope calculation, VTSB would have to fork out RM174.36 million for the rights issue.
VTSB is 49% held by Duxton Investments Pte Ltd, which is ultimately owned by Singapore state investor Temasek Holdings Pte Ltd. The other 51% in VTSB is held by Langkah Bahagia Sdn Bhd, a private company owned by Singapore-based hotel and property tycoon Ong Beng Seng, private equity RRJ Capital founder Richard Ong Tiong Sing and corporate adviser Seow Lun Hoo.
It is worth noting that Beng Seng is currently facing corruption charges in Singapore, linked to the Corrupt Practices Investigation Bureau’s probe into former Singapore transport minister S Iswaran, who is currently serving time in jail for his offences.
Based on latest news reports, Beng Seng is scheduled to plead guilty in court on April 2.
Other major shareholders in Alliance Bank include the Employees Provident Fund with a 8.87% stake, and Global Success Network Sdn Bhd with a 4.98% stake. Global Success is the investment vehicle of Lee Thiam Wah, founder of retail chain 99 Speed Mart Retail Holdings Bhd (KL:99SMART).
Alliance Bank stated that the majority of the proceeds, or RM595.2 million, will be used as working capital, including investments in government securities, money market instruments, and financing activities in the ordinary course of its banking operations.
The remaining RM4.8 million from the total proceeds will be allocated to defray estimated expenses related to the rights issue.
The rights issue is aimed at strengthening the bank’s capital position while providing existing shareholders an opportunity to increase their equity participation on a pro-rata basis, the bank said.
By opting for this method, Alliance Bank said it avoids incurring additional debt and interest expenses, thereby maintaining its financial flexibility.
The bank also views the exercise as a means to support future growth initiatives, enhance its working capital, and ensure adequate liquidity to fund its lending and investment activities.
The rights issue is expected to be completed by the third quarter of 2025, subject to regulatory and shareholder approvals.
RHB Investment Bank Bhd has been appointed as the sole principal adviser for the exercise
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