Shares in CIMB, Malaysia’s second-biggest bank, fell to their lowest level in five months after state investment fund Khazanah Nasional trimmed its stake further through an overnight block trade that raised M$555 million ($132 million).
The transaction's impact went far above its relatively tiny size. Investors took note because it came hot on the heels of Mitsubishi UFJ Financial Group's (MUFG) sale of its CIMB stake last month. What's more, it was Khazanah’s second sale of CIMB shares in less than three months – with the last sale in late July netting $133 million for the state fund.
The transaction itself was small: the 90.5 million shares represented just 1% of CIMB’s share capital, or about five times the stock’s daily trading volume on a three-month average basis.
CIMB shares ended down 1% at M$6.19 by the end of Tuesday morning trade, the lowest level since late May.
Tokyo-listed MUFG ended its shareholding relationship with CIMB last month after selling its entire 412 million shareholding to institutional investors, shortly after the stock reached a two-year high.
While MUFG stressed that the share sale did not imply an end to its alliance with CIMB, equity analysts have raised concerns over potential competition between the two banks, particularly in terms of serving Japanese customers.
For Monday’s sale, Khazanah’s 1% stake in CIMB was priced at the lower end of the M$6.13 to M$6.24 price range, equating to a discount of 1.76% against the stock’s M$6.24 Monday close.
The outcome of Monday’s deal was nearly identical to Khazanah’s previous sale of CIMB shares in July, when the state fund sold some 90.5 million shares at M$6.31, or a discount of 1.7%.
Khazanah’s stake in CIMB is down to 27.1% after Monday’s sale. But scope remains for the state fund to further reduce its stake, since it holds a much larger proportion of the bank than the second largest shareholder, Malaysia's Employees Provident Fund, which has a 13.8% stake.
It is worth noting Khazanah has kept its practice of rotating international investment banks for its equity capital market transactions. This time around, Credit Suisse was chosen as joint bookrunners alongside CIMB, while the July deal was co-managed by JP Morgan and CIMB.
Bank of America Merrill Lynch and Deutsche Bank, alongside CIMB, were joint bookrunners on Khazanah’s $399 million exchangeable sukuk issue last September.
