08 May 2012
Datuk Lim Tiong Chin is negotiating for a management buyout for MPHB's stockbroking firm AA Anthony which analysts estimates to worth around RM 170 million - MPHB's financial executives told TheEdge
(MPHB opening stock price today (8.5.2012) was RM 2.88)
AA Anthony Sdn Bhd’s management led by Datuk Lim Tiong Chin is negotiating a management buyout (MBO) for the Penang-based stockbroker with its parent Multi-Purpose Holdings Bhd (MPHB), financial executives involved in the corporate plan said.
The proposed MBO, which is expected to be finalised by mid-June, is part of MPHB’s rationalisation to focus its business on gaming. Also, Lim, who bought the stockbroking company in 1990, has long been keen to bring the company back into his family holdings, the financial executives said.
Pricing details remain sketchy, but several analysts who track MPHB estimated AA Anthony to be worth around RM170 million in terms of shareholders’ funds.
Lim declined to comment for this article. But one financial executive close to the businessman said the deal is “very much a handshake transaction between” Lim and MPHB’s controlling shareholder, Datuk Surin Upatkoon.
The Thai-born MPHB boss, who is better known by his Chinese name, Lau Kim Khoon, and Lim were key players in the takeover of the diversified conglomerate in 2000. At the time MPHB held stakes in a financial institution and property group Bandar Raya Developments Bhd, interests which were later sold.
AA Anthony merged its operations with JB Securities Sdn Bhd in 2002, but the performance of the enlarged stockbroking entity has been mixed. The segment saw a 37.52% annual growth in its profit before tax of RM16.53 million in 2011. But compared with MPHB’s pre-tax profit of RM678.3 million, it only represents a 2.4% contribution.
The sale of AA Anthony — a company which began operations in the 1830s as an exporter of nutmeg and coconuts to India before venturing into share trading in the early 1990s — is part of MPHB’s asset rationalisation plan to focus its interest in gaming.
MPHB completed the sale of Menara Multi-Purpose for RM375 million in December and a month later disposed of a 13.07% stake in Philippine Racing Club Inc for an estimated RM51.6 million. It currently holds a 19.94% interest in the Philippine venture and the two disposals helped the company realise total gains of about RM217.3 million, which were used to pare down borrowings.
UOB KayHian Research believes that the group’s monetisation exercise could generate over RM600 million cash by end-2012, which represents 16% of its current market capitalisation.
The research firm said it expects MPHB to sell its 6.33% stake in U-Mobile, estimated to be worth RM209 million, and in the remaining interest in Philippine Racing Club, which is valued at around RM90 million.
In February last year, MPHB announced plans to acquire 47% of Magnum from private equity firm CVC Asia Pacific Ltd and the other 2% from certain members of Magnum’s management for a total consideration of RM1.64 billion. Following this, the company was quick to note that it intends to focus on its gaming business and pare down its borrowings by raising RM1 billion through non-core assets sale.