In a research note today, the research house said Maybank had asked merchant bankers to come up with proposals for the placement of its 17.5% equity stake in BII.
Maybank, which owns a 97.5% stake in BII, was requested by Badan Pengawas Pasar Modal, the Indonesian market regulator, to sell down its 17.5% stake to achieve a minimum floating of 20% by end-June.
As a result, the research house said, Maybank’s plan to acquire Singapore broker Kim Eng Holdings for RM4.26 billion, can now easily be funded by internally generated funds.
However, Maybank has yet to finalise the details of the funding structure, Kenanga Research said, adding, it intends to finance the acquisition via the issuance of Singapore dollar-denominated debts and internally generated funds.
Kenanga Research said Maybank has an excess capital of RM3.4 billion currently to support its existing organic growth plan and the placement of the 17.5% BII stake could potentially generate RM1.6 billion cash.
The research house said, with an estimated additional RM2.1 billion capital from its dividend reinvestment plan by end of the financial year 2011, the core capital of Maybank was expected to strengthen further.
“Maybank should have sufficient cash to finance the RM4.26 billion acquisition of Kim Eng,” it said and regarded this as an earnings accretive acquisition.
Kenanga Research has a “buy” recommendation on Maybank’s stock with a target price of RM9.70.