06 June 2017
[Beijing, China]: CIMB Group Holdings Berhad (“CIMB” or “the Group”) and China Galaxy Securities Co. Ltd. (“China Galaxy Securities Group”) announced today that they, through their wholly-owned subsidiaries CIMB Group Sdn Bhd and China Galaxy International Financial Holdings Limited (“CGI”) respectively, have signed a share purchase agreement to formalise their strategic partnership across CIMB’s stockbroking business.
The partnership will see CIMB, a leading ASEAN universal bank, and China Galaxy Securities Group, one of the largest Chinese securities companies, becoming 50:50 shareholders in CIMB Securities International Pte Ltd (“CSI”), the holding company of CIMB’s ex-Malaysia stockbroking business comprising institutional and retail brokerage, equities research and associated securities businesses (“stockbroking business”) across Indonesia, Singapore, Thailand, Hong Kong, South Korea, India, United Kingdom and the United States of America (the “JV”).
CIMB will receive a purchase consideration of SGD167.0 million (RM515.0 million[1]) from CGI for 50% of its stake in CSI which is arrived at based on a multiple of 1.3 times of CSI’s consolidated net asset value of SGD256.9 million as at 31 December 2015.
Group Chief Executive, CIMB Group, Tengku Dato’ Sri Zafrul Aziz said, “This is a momentous occasion and a landmark deal for both CIMB and China Galaxy Securities Group as it heralds the embracing of a new paradigm for the stockbroking business. CIMB’s stockbroking business will effectively be repositioned as a pure play broker with the client base of a universal ASEAN bank. We will continue to offer the full suite of investment banking and capital markets services to our clients, supplemented by the extensive equities distribution platform and research coverage of the joint venture. The partnership with China Galaxy Securities Group is a natural fit and we look forward to realising the great synergies of the joint venture, which also bodes well for the future expansion of our partnership.”
This collaboration marks a significant milestone in not just the relationship between the two leading firms, but also on a wider country agenda. With China’s Belt and Road initiative expected to facilitate growth, consumption and capital flows into the region, the joint venture is poised to further capitalise on China-outbound M&As, China-ASEAN cross-border investments and infrastructure funding. It presents a strategic opportunity for the parties to not only realign their focus and combine their strengths and expertise, but also realise greater cost and efficiency synergies. The strategic move also demonstrates CIMB’s adeptness at recalibrating its stockbroking structure to capture fresh opportunities amidst evolving business dynamics.
Following the signing of the ex-Malaysia share purchase agreement, the parties will work towards obtaining the necessary regulatory approvals with a target to complete by the fourth quarter of 2017. The parties are also in discussions with respect to the Malaysia stockbroking business.
[1] Based on exchange rate of RM3.084/SGD1 as at 6 June 2017
