Mubadala is said to mull options for US$920m RHB stake

January 12, 2018 | By | Reply More

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Abu Dhabi sovereign fund Mubadala Investment Co. is exploring options for its stake in RHB Bank Bhd., Malaysia’s fourth-biggest lender, including a possible sale, people with knowledge of the matter said.

Mubadala has held informal discussions with potential advisers to seek suggestions on its 17.8 percent holding in RHB Bank, according to the people. The fund sees its RHB Bank holding as non-core and is considering options for the stake as part of a broader review of its portfolio, one of the people said, asking not to be identified because the information is private. Mubadala’s stake is worth about 3.66 billion ringgit ($920 million) based on Thursday’s closing price.

The Abu Dhabi fund’s Aabar Investments PJS unit is the second-biggest shareholder in RHB Bank, according to data compiled by Bloomberg. It trails only Employees Provident Fund, Malaysia’s biggest pension fund, which owns 40.7 percent. Deliberations are at an early stage, and there’s no certainty they will lead to a transaction, the people said.

“They would definitely be a willing seller since the stake is considered non-core,” Geoffrey Ng, a Kuala Lumpur-based director at Fortress Capital Asset Management Sdn., said by phone Friday. “They have been wanting to sell the stake for some time.”

Mubadala, whose portfolio is valued at about $127 billion, inherited the RHB Bank investment through a combination with fellow sovereign fund International Petroleum Investment Co. that was finalized last year. It has been reviewing some of the assets it gained through that merger, people familiar with the matter said in November. Mubadala has been working with consulting firm A.T. Kearney Inc. on options including asset sales and mergers within the portfolio, the people said at the time.

Legacy Investment

The fund is regularly reviewing its portfolio for opportunities “that make sense for the best financial outcome,” a spokesman for Mubadala said. A representative for RHB Bank said she couldn’t immediately comment.

A deal could mark an end to a near decade-long investment in RHB Bank from the oil-rich Gulf emirate. Government-owned Abu Dhabi Commercial Bank PJSC first bought into a precursor of RHB Bank in 2008. It sold those shares to IPIC’s Aabar Investments arm in 2011.

“Mubadala could potentially opt to sell given that this is a legacy investment from its merger with IPIC,” Danny Wong, chief executive officer at Areca Capital Sdn. in Kuala Lumpur, said by phone Friday. “Their entry price is quite high — it’s hard to say whether they will cut their losses.”

Abu Dhabi first announced plans in 2016 to combine Mubadala and IPIC as part of the country’s investment strategy to weather a slump in oil prices. The merged entity ranks as the world’s 14th-largest fund, according to the Sovereign Wealth Fund Institute.

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