Lim Loong Seng, country head of OSK Indochina Bank (L), Group Managing Director of RHB Capital Group Kellee Kam (C), and OSK Investment Bank CEO U Chen Hock pose for a photograph yesterday following RHB Capital Group’s acquisition of OSK Indochina Bank in Phnom Penh. Photograph: Hong Menea/Phnom Penh Post
One of Malaysia’s biggest investment banks, RHB Capital, announced it will acquire OSK Indochina Bank, via the transfer of 100 per cent of OSK Investment Bank shares from parent OSK Holdings, giving OSK Holdings a 10 per cent stake in the larger Malaysian RHB Capital Group.
OSK Investment Bank has 94 offices throughout the ASEAN countries, Hong Kong and China with more than 500,000 customers, 3,600 employees and is well known in Cambodia along with its SECC-licenced stock brokerage firm, OSK Indochina Securities Limited.
On hand at the Sunway Hotel yesterday to announce the deal were OSK Indochina Bank’s Country Head Lim Loong Seng, OSK Investment Bank CEO U Chen Hock and RHB Capital Group Managing Director Kellee Kam.
The agreement, signed on May 28, makes RHB Investment Bank Malaysia’s largest investment bank by assets and gives OSK Investment Bank access to a larger capital base, enabling it to make larger deals.
The final transaction is expected to be completed in the fourth quarter of this year following shareholder approvals and regulatory approvals from the various markets where OSK operates.
Just what the name of the new combined group will be has not yet been released, since OSK has a strong brand name presence in Cambodia and other markets, just as RHB has a strong recognition in Malaysia and elsewhere.
RHB Capital Group is the fifth-largest listed financial services group in Malaysia, with a market capitalisation of more than $5 billion, assets in excess of $48 billion, 12,000 employees and 3.2 million customers spread across Malaysia, Singapore, Thailand, Brunei and Vietnam.
“Some have capital and some need capital,” said RHB’s Kellee Kam. “It is about how you answer the connections question. RHB is looking to get that connection going. OSK needs an additional enabler, and we can provide that.”
OSK Investment Bank CEO U Chen Hock said the RHB merger would enable OSK to make bigger deals.
“We are relatively small and that prevents us from doing a lot of bigger transactions that will add a series of values. With additional capital we will be able to do a lot more things. For example, RHB Capital Group is very large and well connected with the Government-Linked Companies [GLCs] in Malaysia.”
The deal also gives RHB Capital access to the fast-growing Cambodian market.
“OSK gives us client segment coverage,” said RHB’s Kam. “From a regional perspective it is difficult to grow if you don’t have access to distribution."
"To address the ASEAN opportunity, this acquisition completes the value chain, from origination all the way to execution and distribution as well as a commercial banking platform to fully provide a complete set of products and services all the way from investment banking to commercial banking,” he said.
About 40 per cent of RHK is owned by the Malaysian Employees Provident Fund, to which all private sector employees contribute about 11 per cent of their paychecks.
The deal is seen as beneficial for the stock exchange-oriented OSK group in an era of increased migration to online trading and smaller stock exchange margins, giving access to more capital for an increasing investment bank portfolio.
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