Update CIMB to dual list on SET

KUALA LUMPUR: The nation’s second-largest banking concern CIMB Group Holdings Bhd is seeking a dual listing on the Stock Exchange of Thailand (SET), as it underlines its intention to be a significant regional player moving forward.

The market responded positively to the news, sending CIMB’s share price to a new high of RM13.28 at the close yesterday, up 36 sen or 2.79% after rising as much as 38 sen to RM13.30. A total of 7.4 million shares changed hands.

The stock has been skyrocketing of late — reaching a 29-month high of RM12.32 on Oct 14 versus the previous high of RM12.29 set on May 10, 2007. In intra-day trade on Nov 10, 2009, it touched a high of RM13.14.

CIMB has also closed the gap on MALAYAN BANKING BHD [] as the biggest banking concern in the country in terms of market capitalisation.

As at the close of trading yesterday, CIMB’s market capitalisation came up to RM47.57 billion, just slightly over RM1 billion less than Maybank’s
capitalisation of RM48.63 billion. Maybank closed at RM6.87, up two sen.

Market observers said the increase in CIMB’s share price was a positive reaction to its announcement that it would list its shares on the SET.

In a statement, CIMB Group chief executive officer Datuk Seri Nazir Razak said the banking group’s intention was to strengthen its commitment to Thailand and further facilitate its development as a regional universal bank.

“This move amplifies our commitment to Thailand. The listing will enhance our profile to investors and the general public in Thailand and makes it easy for them to invest in the growth of a regional bank,” he said.

CIMB’s listing will be the first foreign listing on the SET since the Securities and Exchange Commission (SEC) of Thailand and SET approved their new guidelines for foreign listings in October 2009. The regulations will be effective Dec 1, 2009.

Based on CIMB’s market capitalisation of US$13.7 billion (RM46.25 billion) as at Nov 13, the banking group would be among the three largest listed companies on SET and would be the largest financial services group.

“As CIMB Group is a leading financial group in the region, its listing will offer Thai investors an alternative worthy of consideration and will raise the profile of the Thai market in the eyes of fund managers worldwide,” said SET president Patareeya Benjapolchai.

CIMB plans to undertake an initial public offering (IPO) of up to 35 million ordinary shares of RM1 each to retail and institutional investors in Thailand. The Thai shares, when listed, will be fully fungible with their Malaysian counterparts, the statement said.

A minimum offering size would be determined at a later date and could comprise either new CIMB shares or existing shares offered for sale by a major CIMB shareholder.

The listing exercise was expected to be completed in the first half of 2010, although the banking group still has to seek approval from both Malaysian and Thai regulators.

CIMB’s proposed listing would be the first to take advantage of the new regulations on foreign listings approved by Thai regulators, which will be effective next month.

Based on those regulations, the SET would only allow dual listing of companies where the home exchange is a member of the World Federation of Exchanges and the regulator is a member of the International Organisation of Securities Commissions.

CIMB already has an established presence in Thailand through its 93.15%-owned subsidiary CIMB Thai Bank Public Co Ltd, which is listed on the SET and will continue to do so post the dual-listing exercise.

Nonetheless, CIMB Thai Bank president and CEO Subhak Siwaraksa said the bank might consider a restructuring.

“CIMB Thai will continue to be listed on the SET for now,” said Subhak. “However, CIMB Group’s proposed listing would be an opportune time for us to reconsider this in consultation with our shareholders”.

CIMB Thai contributed just under 1% to the CIMB Group’s profit before tax (PBT) in its most recent financial quarter earnings (third quarter ended Sept 30, 2009).

Meanwhile, initial reactions from local fund managers and analysts appear to be neutral on the latest development as many see it as an effort by CIMB to grow its regional brand, although the announcement came as a surprise to many of them.

“For them to seek dual listing, it shows they are trying to really be a regional group as they want a market presence there,” said MIDF Investment CEO Scott Lim. “It’s a very strong effort from CIMB to make their presence felt.”

He said the exercise would be indicative of CIMB’s long-term commitment to Thailand and allow for greater branding presence.

Head of research and partner of investment managers Kumpulan Sentiasa Cemerlang Sdn Bhd Choong Khuat Hock said the move made sense because CIMB had ambitions to grow its Thai business, and listing on the SET could make fund raising easier without incurring currency risk.

“It makes more sense for them as they can now raise (funds) in baht than to raise in ringgit or US dollar and converting,” Choong said.

He added that he did not think the listing on SET would have any significant impact on the locally-listed counter. In the case of most corporates with dual-listing status, Choong said, the activity tended to remain with the shares listed on the primary market.

In terms of numbers, a local research analyst said there would be a minimal impact on the counter as it only affected about 1% of the current sharebase. The listing, however, would diversify the shareholder base.

“There is no bottom line impact at all, or change in any operation. It’s just the listing of shares. This move has more to do with branding and allowing other people to tap the shares from abroad,” she said.