Singapore asset manager Lion Global Investors Ltd. (LGI) is selling its 70% stake in Malaysia’s Pacific Mutual Fund Bhd to Bank of Singapore Ltd. for 24.9 million ringgit (US$5.98 million) in a cash deal that will eventually turn the Malaysian firm into a wholly-owned unit of the private lender.
The companies are all part of Singapore’s OCBC Bank group. LGI’s parent company is Great Eastern Holdings, the insurance arm of OCBC Bank. Bank of Singapore is the private banking arm of OCBC Bank.
LGI has signed a conditional agreement with Bank of Singapore for the 70% stake sale, Great Eastern Holdings says in a filing to the Singapore Exchange on June 11.
The insurer adds that Bank of Singapore will also acquire the balance 30% in the Malaysian firm now held by an unnamed wholly-owned unit of OCBC Bank at the "same price per share".
The deal is subject to a number of approvals, including from the Monetary Authority of Singapore and Securities Commission Malaysia.
A Kuala Lumpur-based fund manager says Bank of Singapore is paying a “reasonable” price for the stake in Pacific Mutual Fund, and that it’s in line with another recent deal in Malaysia’s fund management industry.
In that deal announced in March, Kuala Lumpur-based asset manager Kenanga Investors is acquiring rival Libra Invest from ECM Libra Financial Group for 50.1 million ringgit cash, or about 0.008 sen for each ringgit of Libra Invest's assets under management (AUM). Libra Invest had 6.07 billion ringgit of AUM as of end-January 2019.
"The deal [for Pacific Mutual Fund] was done at a price similar to its audited tangible asset value of 21.6 million ringgit [as at December 31, 2018], and in terms of dollar paid for each [ringgit] of AUM, it looks pretty much the same level as the previous deal involving Kenanga Investment Bank and Libra Invest," the fund manager tells Asia Asset Management (AAM), speaking on condition of anonymity.
Based on Pacific Mutual Fund’s 2.28 billion ringgit of AUM as of end-May, Bank of Singapore is paying around 0.011 sen for every ringgit of the former’s assets.
Even though the deal is between companies from the same group, the fund manager believes it can provide synergy for both Pacific Mutual Fund and Bank of Singapore.
"The deal could expand Pacific Mutual Fund's customer base. At the same time, we could see both companies working more closely to develop new products moving forward," he says.
A spokesperson for Pacific Mutual Fund declined to comment on the potential impact of the deal. Spokespersons for LGI and Bank of Singapore did not immediately respond to questions from AAM.
LGI had S$55.6 billion ($41.1 billion) of AUM as of end-March 2019.