Monday, April 30, 2012


DBS Bank;s proposed acquisition of a 14.2% stake in AFG from Temasek Holdings may be a left to right transaction, but industry observers believed that for AFG at least, it is more than that.

Market observers point out that should a working relationship happen following the entry of DBS into AFG, it will take time. At present, many agree that a 14.2% stake is not enough to bring about anything meaningful and it is highly likely that DBS will enter AFG with bigger plans than just that stake.

DBS would eventually consider an investment for which it can equity account.

DBS would have an effective 14.2% stake control of Alliance via its acquisition of Temasek’s Duxton Investments’ 49% stake in Vertical Theme Sdn Bhd. Market observers believe this could be a preclude to an offer for the remaining 51% in Vertical Theme owned by Langkah Bahagia, which would result in DBS ultimately owning a 29.1% stake.

As at March 2012, Duxton Investments and Langkah Bahagia, via Vertical Theme held 29.1% stake in AFG.

It is an open secret that DBS has been keen to enter Malaysia and has been looking around for options. In 2011, apart from the rumors of entry into Malaysia through AFG, there was talk that one of the options being explored was by acquiring RHB Bank via parties related to DBS and later merging RHB Bank with Alliance . That would have resulted in Temasek and RHB’s substantial shareholder- the EPF – holding stakes in the parent company of the merged banks. But the plan is understood to have shelved.

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