CIMB Malaysia to recognise RM920m gain from disposal of stake in CIMB-Principal Asset Management
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CIMB Group Holdings Bhd is expected to recognise a gain of about RM920 million following the completion of the divestment of its 20% stake in CIMB-Principal Asset Management Bhd and 10% equity interest in CIMB-Principal Islamic Asset Management Sdn Bhd to Principal Financial Group for RM470.29 million today.
This, however, is lower than the initial expectation of RM950 million.
The banking group told Bursa Malaysia that its common equity tier 1 ratio will also see an increase of 15 basis points, subject to final adjustments.
Following the corporate exercise, CIMB’s shareholding in CIMB-Principal Asset Management Group and CIMB-Principal Islamic Asset Management will be reduced to 40% with the balance 60% owned by Principal Financial Group.
“Asset management continues to be an integral part of our regional banking business and this shareholding realignment enables CIMB-Principal to have more scale and improved global investment expertise. We expect this change to improve our ability to deliver better products to our clients, while creating sustainable long term value for CIMB group,” said CIMB group CEO Zafrul Aziz.
CIMB and Principal Financial Group have partnered in the region since 2004 and have grown their operations across Malaysia, Singapore, Indonesia and Thailand.
The CIMB-Principal Asset Management group of companies has more than RM80 billion in assets under management and is one of the largest asset managers in the region.
At the noon break, CIMB shares gained 8 sen or 1.3% to RM6.13 on some 8.95 million shares done.
Questions & Answers
Q.Why is the recognised gain from the divestment lower than initially expected?
Why is the recognised gain from the divestment lower than initially expected?
The article states the recognised gain is about RM920 million, which is lower than the initial expectation of RM950 million. However, it does not provide a reason for this reduction in the expected gain.
Q.How will this transaction impact CIMB Group's financial ratios?
How will this transaction impact CIMB Group's financial ratios?
The banking group expects its common equity tier 1 ratio to increase by 15 basis points. This rise is subject to final adjustments after the completion of the divestment.
Q.What is the new ownership structure of CIMB-Principal Asset Management Group after this exercise?
What is the new ownership structure of CIMB-Principal Asset Management Group after this exercise?
After the corporate exercise, CIMB's shareholding in CIMB-Principal Asset Management Group and CIMB-Principal Islamic Asset Management will be reduced to 40%. The remaining 60% will be owned by Principal Financial Group.