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CIMB Group Holdings Bhd is expected to record a gain of disposal of approximately RM200 million from the process of transferring the group’s stockbroking business to its joint venture company with China Galaxy Securities Co Ltd.
This comes after taking into account the premium on the disposal of approximately RM433 million and goodwill attributable to the business.
CIMB said the consideration in connection with the proposed business transfer will be satisfied in cash and it was determined based on the future prospects and net asset value of the in-scope business as at Dec 31, 2015, which amounted to RM565.6 million.
The consideration is subject to closing audit adjustments, if any.
Jupiter Securities, the subsidiary of China Galaxy Securities Co Ltd (CGS)-CIMB Holdings Sdn Bhd, which is the Malaysian joint venture entity, will operate the stockbroking business.
CIMB said in a stock exchange filing that its wholly owned subsidiary CIMB Group Sdn Bhd (CIMBG), China Galaxy’s wholly owned unit China Galaxy International Financial Holdings Ltd (CGI), and CGS-CIMB Holdings Sdn Bhd has inked a share subscription agreement for the subscription of new shares in CGS-CIMB Holdings Sdn Bhd.
The proposed business transfer entails the sale of CIMB Investment Bank Bhd’s cash equities business and 100% equity interest in CIMB Futures Sdn Bhd as well as CIMB Bank Bhd’s equity financing services business and share margin financing granted in connection with the cash equities to Jupiter Securities.
After the completion of the exercise, CIMBG and CGI will hold 50% stake each in the Malaysian JV entity.
The exercises are expected to be completed in the first half of 2019.
