ADCB signed an agreement to sell its percent stake in RHB Capital to Aabar Investments, an Abu Dhabi investment fund, for 10.80 ringgit per share, bringing in AED7 billion ($1.91 billion).
“After considering all related costs... exchange rates, hedging, cost of funding etc... this transaction shall contribute approximately AED1 billion to the bank’s overall profit,” ADCB said in a bourse statement.
The lender, one of the region’s most exposed banks to indebted conglomerate Dubai World, said it will use proceeds of the stake sale to bolster its balance sheet and will help the bank focus more on its local markets.
Consideration for the sale will be settled in cash, one month from the date of signing the agreement, ADCB said.
RHB, Malaysia’s fifth-largest lender with a market value of about $7.2 billion, is presently a takeover target of Malaysia’s two largest banking groups, CIMB Group and Malayan Banking (Maybank).
Analysts have said the sale to Aabar could complicate a merger bid between RHB and either CIMB or Maybank as it set the floor for the RHB takeover, pricing RHB at a minimum 2.25 times book value. RHB’s book value was 4.79 ringgit per share as of March 31.
