KUALA LUMPUR: CIMB Group Holdings Bhd and Principal Financial Group (PFG) have signed agreements for for the latter to increase its stake in CIMB-Principal Asset Management Group and CIMB-Principal Islamic Asset Management to 60 per cent.
PFG will pay CIMB up to RM470.3 million for the additional ownership stake and upon completion, CIMB will retain 40 percent ownership in the entities.
In a filing to Bursa Malaysia today, CIMB Group said it expects to recognise a gain on disposal of approximately RM950 million and a Common Equity Tier 1 ratio improvement of approximately 18 bps upon completion of the proposed divestment.
The joint ventures will continue to be co-managed by both companies.
“As a leading Asean universal bank, asset management continues to be an integral part of our regional banking business. This shareholding realignment will ensure that our asset management joint venture with Principal achieves its maximum potential and continues to be sustainably value-accretive to CIMB,” said CIMB group chief executive officer Tengku Datuk Seri Zafrul Aziz.
“Scale and extensive investment expertise are important to this business and we believe this strategic realignment will enhance the value proposition of the joint venture to enable us to serve our customers better,” he said.
The transaction is expected to be completed in the second quarter of 2018 and is subject to the relevant regulatory approvals.
“Southeast Asia is a growing and important region for Principal as we focus on bringing longterm saving and investing products to the market.
“By increasing our ownership stake in the CIMB-Principal joint ventures, we will be better able to bring our global asset management expertise and experience to bear while still leveraging the multi-channel distribution power of CIMB to continue to serve our customers,” said PFG Southeast Asia and India president Pedro Borda.
The new ownership and governance structure will strengthen the joint ventures’ capability to provide specialised and differentiated products and services to meet customer needs.
It will further align existing investment management teams with the asset management arm of Principal, Principal Global Investors, and leverage the firm’s global distribution capabilities and asset management franchise.
CIMB and PFG have partnered in the region since 2004 and had successfully grown their operations across Malaysia, Singapore, Indonesia and Thailand.
The CIMB-Principal Asset Management group of companies has more than RM70 billion in AUM (asset under management) and is one of the largest asset managers in the region.
CIMB-Principal Islamic Asset Management has been managing Islamic institutional mandates since 2008 and is the sole end-to-end Islamic asset management boutique of the CIMB Group and PFG.