In a bourse filing yesterday, the financial institution said 112.56 million of its shares were sold via a direct business transaction at RM1.97 per piece to the state’s financial secretary’s office.
This transaction followed earlier reports that LTAT, which previously owned a 33.2% stake in Affin, was planning to dispose of a 5% block of the bank’s shares to a Sarawak government entity.
Neither Affin nor LTAT have provided any information on the reasoning for the divestment.
However, the deal is understood to be linked to LTAT’s proposed privatisation of Boustead Holding Bhd, which was announced in early March.
LTAT, which held a 59.4% interest in Boustead then (March 2), reportedly needed to fork out a total of RM703.2 million at 85.5 sen per share in order to complete the exercise.
It has since increased its shareholding in Boustead to 73.81% as of today.
On the other hand, Boustead Holdings owns a 20.9% stake in Affin Bank. This means that if LTAT were to wholly acquire Boustead without divesting any of its Affin shares, it would have increased its effective interest in the bank to 54.1%.
This scenario would require LTAT to obtain the finance minister’s approval, upon Bank Negara Malaysia’s recommendation, before completing the Boustead privatisation as required under Section 87 of the Financial Services Act 2013.
Section 87 of the Act states: “No person shall enter into an agreement or arrangement to acquire any interest in shares of a licensed person by which, if the agreement or arrangement is carried out, he would hold (together with any interest in shares of that licensed person which are already held by such person) an aggregate of more than 50% of the interest in shares of the licensed person, without obtaining the prior written approval of the minister, on recommendation of Bank Negara”.
Therefore, by divesting 4.95% of its stake in Affin, LTAT would not need regulatory approval to conduct the Boustead privatisation as it would not hold more than 50% effective interest in the commercial bank in the event of such exercise.
Affin Bank, Malaysia’s second-smallest commercial bank, has long been a cash cow for LTAT. In recent years, the bank has racked up some impressive profits, including RM1.3 billion in FY2022, and RM 526.93 million in FY2021.
At midday, Affin Bank’s shares were down 0.5% or 1 sen to RM2.01 giving the company a market capitalisation of RM4.57 billion.