CIMB weighs privatisation of Indonesian subsidiary amid market volatility
Analysts say a placement with strategic investors is another option as new free-float rules require CIMB to reduce its stake in CIMB Niaga.
CIMB Group Holdings Bhd is considering whether to take CIMB Niaga private as volatility in Indonesian equities makes a secondary share offering less attractive. Analysts said the Malaysian banking group was also weighing a share placement with strategic investors.
Revised rules on minimum public shareholdings require CIMB to bring its 91.4 per cent interest in the Indonesian bank down to 87.5 per cent or less by March 2027, and to 85 per cent by March 2028. Indonesia aims to make its stock market more investable, but the possibility of MSCI changing its classification from emerging market to standalone market has prompted widespread equity selling.
Wong Ling Ling, an analyst at Public Investment Bank Bhd, said the privatisation plan was still preliminary and would face regulatory obstacles. PublicInvest estimated a cost of about RM800 million to acquire the minority shareholders' stakes. Wong said CIMB remained optimistic about CIMB Niaga, with growth driven mainly by wealth management, selected SMEs and Shariah banking.
Hong Leong Investment Bank said private ownership could make CIMB Niaga's ownership arrangements simpler and allow CIMB more flexibility in pursuing its longer-term Indonesian strategy. It cautioned that the transaction's structure was uncertain and might require group capital, especially if it included purchasing some remaining minority holdings.
