Malayan Banking Bhd, Malaysia’s biggest bank, agreed to pay as much as US$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 (US$680 million), or 470 rupees a share, for 15 percent of Pakistan’s biggest bank by value, it said in a statement yesterday. The price is an 11.4 percent premium to MCB’s closing price on Friday. Maybank also has the option to buy an additional 5 percent at 510 rupees a share, it said.
The acquisition will help Maybank close in on rival Bumiputra-Commerce Holdings Bhd, which has expanded in overseas markets as Malaysia’s economic growth slows. In March, Maybank said it was 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 US$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 the book value, twice the average 2.2 times for Pakistan banks, data compiled by Bloomberg show. The price is 15 times the Karachi-based bank’s earnings for this year, Maybank said. The estimated price-earnings ratio for the Karachi Stock Exchange KSE100 Index is 16.5 times, Bloomberg data show.
MCB shares rose 1.7 percent to 429 rupees at 10:28am yesterday 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 yesterday.
He added that the price might 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 last year.
That compares with Pakistan, a country with a population six times bigger than Malaysia, which forecasts its economy will expand 6 percent this year.