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January 12, 2018

Principal to raise stake in asset management JVs with CIMB

US-based Principal Financial Group has agreed to increase ownership stakes to 60% in its asset management joint ventures (JVs) with Malaysian financial group CIMB .

Principal will pay a total consideration of around $117m for the additional stake in CIMB-Principal Asset Management Group and CIMB-Principal Islamic Asset Management.

CIMB will retain a 40% stake in the JVs following the completion of the deal. It will also continue to co-manage the entities along with Principal.

Principal president for Southeast Asia and India Pedro Borda said: “Southeast Asia is a growing and important region for Principal as we focus on bringing long-term saving and investing products to the market.

“By increasing our ownership stake in the CIMB-Principal joint ventures, we will be better able to bring our global asset management expertise and experience to bear while still leveraging the multi-channel distribution power of CIMB to continue to serve our customers.”

CIMB expects gains of nearly MYR950m from the divestment. It also expects the deal to boost its CET1 ratio by around 18 basis points.

CIMB group CEO Zafrul Aziz added: “This shareholding realignment will ensure that our asset management joint venture with Principal achieves its maximum potential and continues to be sustainably value-accretive to CIMB.”

The deal is anticipated to close in the second quarter of 2018, subject to regulatory approvals.

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