Malaysia’s CIMB to gain RM200m from stockbroking business transfer
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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.
Questions & Answers
Q.What is the total consideration CIMB will receive for transferring its stockbroking business?
What is the total consideration CIMB will receive for transferring its stockbroking business?
The consideration for the business transfer will be satisfied in cash. It was determined based on future prospects and the net asset value of the in-scope business, which was RM565.6 million as of December 31, 2015.
Q.Which entities will operate the stockbroking business after the transfer is complete?
Which entities will operate the stockbroking business after the transfer is complete?
Jupiter Securities, a subsidiary of the Malaysian joint venture entity CGS-CIMB Holdings Sdn Bhd, will operate the stockbroking business after the completion of this exercise.
Q.What specific parts of CIMB's business are included in this transfer?
What specific parts of CIMB's business are included in this transfer?
The proposed business transfer includes the sale of CIMB Investment Bank Bhd’s cash equities business and its 100% equity interest in CIMB Futures Sdn Bhd. It also covers CIMB Bank Bhd’s equity financing services and share margin financing.
Q.When is the transfer of the stockbroking business expected to be finalised?
When is the transfer of the stockbroking business expected to be finalised?
The exercises involved in the transfer of the stockbroking business are expected to be completed during the first half of 2019. The article provides no further details on the exact timeline.
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