Public Bank To Acquire 44.15 Pct In LPI Capital For RM1.72 Bln Cash

KUALA LUMPUR, Oct 10 (Bernama) -- Public Bank Bhd has proposed to acquire a 44.15 per cent stake in LPI Capital Bhd, comprising 175.9 million shares, for RM1.72 billion in cash or RM9.80 per share.

Following the proposed acquisition, Public Bank will be required to extend a mandatory general offer (MGO) to acquire all remaining LPI shares not already held by the bank.

Managing director and chief executive officer (CEO)Tan Sri Tay Ah Lek said the acquisition would complement the bank’s current financial services, providing a more comprehensive service offering.

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“This proposed acquisition aligns with the group’s plan to grow not just organically, but through strategic acquisition to expand our product and service offerings.

"This will enable the group to further expand our services in Vietnam and eventually into Indochina countries,” he told a press conference here today.

Public Bank, the country's third largest banking group by assets, has a cash reserve of RM12.4 billion.

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As of Oct 8, 2024, LPI Capital’s market capitalisation is RM5.2 billion, while Public Bank’s market value is RM88.7 billion.

LPI Capital, 42.74 per cent owned by Consolidated Teh Holdings Sdn Bhd (a private investment vehicle of Public Bank founder, the late Tan Sri Teh Hong Piow) fully owns the general insurance company Lonpac Insurance Bhd.

Tay highlighted that the proposed acquisition would enable Public Bank to establish a strong presence in Malaysia’s general insurance sector, providing complementary services to its existing financial services and family takaful offerings.

He noted that the acquisition of LPI Group is a unique opportunity for Public Bank to advance towards a “Universal Banking Model” offering a comprehensive and diverse range of financial and related products and services under one umbrella.

"With our existing network of over 260 branches nationwide, LPI will be able to leverage and expand its distribution channels and grow its general insurance business in Malaysia. 

"We also aim to tap into LPI's sales and distribution network to expand our reach to its clients and customers," he said. 

Aside from the mutual cross-selling, Tay said both companies would also explore possibilities to develop new integrated products and services to cater to their customers’ financial and insurance needs.

"We are confident of achieving business synergies and spearhead both Public Bank and LPI's growth in the immediate future and continue our growth trajectory moving forward," he concluded. 

Public Investment Bank's CEO Lee Yo-Hann noted that Public Bank has already received approval from the Finance Ministry (MoF) and Bank Negara Malaysia (BNM) for the proposed acquisition, which is expected to be completed by the first quarter of 2025.

As this acquisition involves a related party transaction, the bank will seek independent shareholders' approval in an extraordinary general meeting (EGM).

"If the acquisition is approved at the EGM, Public Bank will be obliged to extend an unconditional MGO for the remaining equity interest in LPI not already owned by it," he said. 

Lee said the acquisition is expected to contribute positively to Public Bank's future earnings and accelerate the banking group’s shift towards a universal banking model, offering competitive advantages through greater pricing flexibility, product integration, and customer convenience.

“We also expect this to help increase non-interest income and mitigate interest rate risk,” he added.

On the industry's outlook, Lee said the prospects remain robust supported by economic growth and population increases, which could drive demand for general insurance.

He noted that rising vehicle sales and construction activities would likely boost demand for motor and fire insurance while increasing health awareness, medical costs, and climate-related events would further fuel the demand for insurance products.

"Going forward, Lonpac will focus on enhancing its IT capabilities to drive efficiency and automation.

"We also plan to launch green insurance products, catering to sustainability-focused assets, while leveraging our agency network, insurance brokers, and global partnerships to expand the business," he said.

At the close of trading on Tuesday, Public Bank’s share rose one sen to RM4.57, with 12.18 million shares traded. LPI Capital’s share jumped 22 sen to RM13.00, with 68,100 shares changing hands.

Both counters will resume trading at 9 am on Friday, Oct 11.

-- BERNAMA