Affin Holdings has agreed to acquire Hwang-DBS (Malaysia)’s investment banking, asset management and futures businesses for MYR1.4 billion (US$420 million).
The deal is expected to be completed by the second quarter of 2014.
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Following the acquisition, the two firms will merge to form a brokerage house in Malaysia based on combined trade value and traded volume.
The acquisition will add an additional of MYR80 million in pre-tax profits to the investment bank for the financial year 2015 and quadruple its distribution network to over 770 remisiers and 25 branches across Malaysia.
Additionally, acquisition will allow Affin IB to strengthen its equity capital market (ECM), debt capital market and wealth management businesses.
As part of the deal, Affin will purchase 100% of Hwang-DBS Investment Bank, 70% of Hwang Investment Management, 49% of Asian Islamic Investment Management and 100% of HDM Futures.
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By GlobalDataIn order to fund the acquisition, Affin has secured bridging loans of MYR1.4 billion and plans to raise additionally MYR1.25 billion from corporate exercises that include a rights issue of new Affin shares.
Affin Investment Bank (Affin IB) managing director Maimoonah Hussain said senior management and key personnel of Hwang-DBS will be retained and additional staff would be used for the bank’s planned expansion.
"There will be an overlap in support staff but Hwang-DBS is being acquired for growth. Affin has lots of plans to go forward in terms of investment banking business. We envisage that staff will be redeployed to many other areas that we want to grow," she said.
Mohd Zahidi Zainuddin, chairman of Affin Holdings, said: "The Hwang-DBS businesses will help transform Affin’s investment banking franchise by creating leading market positions of scale."
