Malayan Banking to Pay Up to $933 Million for 20% of MCB Bank

Malayan Banking to Pay Up to $933 Million for 20% of MCB Bank

By Soraya Permatasari
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May 5 (Bloomberg) -- Malayan Banking Bhd., Malaysia's biggest bank, agreed to pay as much as $933 million for 20 percent of Pakistan's MCB Bank Ltd., its third overseas acquisition this year, to counter slowing growth at home.

Maybank will pay 44.3 billion rupees ($680 million), or 470 rupees a share, for 15 percent of Pakistan's biggest bank by value, it said in a statement today. The price is an 11.4 percent premium to MCB's May 2 closing price. Maybank also has the option to buy an additional 5 percent at 510 rupees a share, it said.

The acquisition will help Maybank close the lead of rival Bumiputra-Commerce Holdings Bhd., which has expanded in overseas markets as Malaysia's economic growth slows. In March, Maybank said it's buying banks in Indonesia and Vietnam, one year after announcing plans to grow through acquisitions.

``Maybank has been a laggard, they're playing catch-up with their rivals,'' said Pankaj Kumar, who manages about $460 million as chief investment officer at Kurnia Insurans Bhd. in Petaling Jaya, outside Kuala Lumpur. ``There's not much you can do in Malaysia, you have to seek other countries where growth seems to be apparent, that would make sense.''

The Kuala Lumpur-based bank is buying the MCB stake at 5.1 times book value, twice the average 2.2 times for Pakistan banks, data compiled by Bloomberg shows. The price is 15 times the Karachi-based bank's earnings in 2008, Maybank said. The estimated price-earnings ratio for the Karachi Stock Exchange KSE100 Index is 16.5 times, Bloomberg data shows.

`Wave of Interest'

MCB shares rose 1.7 percent to 429 rupees at 10:28 a.m. Karachi time, a two-week high. Maybank shares were suspended from trading ahead of the announcement.

``Pakistan's banking sector has attracted a wave of interest, especially from foreign banks,'' Winson Ng, an analyst at CIMB Investment Bank Bhd. who rates Maybank shares ``outperform,'' wrote in a report today. He added the price may reflect a ``bidding war.''

Maybank is expanding overseas to tap growth in less-developed economies. Malaysia's economic expansion is set to slow to as little as 5 percent this year from 6.3 percent in 2007. That compares with Pakistan, a country with a population six times bigger than Malaysia, which forecasts its economy will expand 6 percent this year.

Maybank's investment will ``position itself in a high growth and under-penetrated banking market with a large population,'' according to the statement. The bank will appoint two directors on MCB's board, it said. It will also decide on raising capital for the transaction by the end of June.

``We look forward to the expertise Maybank will be able to provide in consumer and Islamic banking, two of the faster growing segments in the market,'' MCB Chairman Mian Mohammad Mansha said in a separate statement.

Maybank isn't in a hurry to carry out more takeovers, Chief Executive Officer Abdul Wahid Omar said today.

The Malaysian bank in March offered $2.7 billion for PT Bank Internasional Indonesia, that country's sixth-biggest bank. It also agreed that month to buy 15 percent of Vietnam's An Binh Bank for 430 million ringgit ($136 million).