PETALING JAYA: After being suspended for more than five years, Hong Leong Capital Bhd (HLCap), which is controlled by tycoon Tan Sri Quek Leng Chan via Hong Leong Financial Group Bhd (HLFG), will resume trading on Bursa Malaysia today.
The resumption of trading of HLCap could pave the way for a group-wide restructuring at HLFG at a later time.
At the moment, most financial institutions are anchored on the bank as the holding company.
For instance, Maybank, Public Bank and RHB are the holding company of their financial groups. RHB was one the latest to go through a restructuring where the bank became the holding company.
It brings about better optimisation of the use of capital.
“In Hong Leong group’s case, the bank is at the bottom of the structure. It is an old structure and not efficient use of capital. In the past, there was speculation of a merger between HLCap, which houses the investment bank, and Hong Leong Bank Bhd (HLB) where the commercial banking operations are parked.
“It requires two sets of capital obligations which is not really necessary. Nowadays, all financial groups are in one company hence reducing the need for capital, ” said one fund manager.
In 2013, HLCap grabbed headlines following a corporate battle between Quek and entrepreneur Datuk Dr Yu Kuan Chon, who thwarted its privatisation attempt.
The medical doctor-turned-entrepreneur, whose flagship is Perak-based YNH Property Bhd, had emerged as a substantial shareholder in HLCap after HLFG launched an offer to take the former private at RM1.71 per share in January 2013.
From then on, Yu continued buying HLCap shares, and at its peak, owned close to a 9% stake, giving him a strong bargaining position in relation to the privatisation of HLCap.
However, he periodically sold his shares to meet the minimum 10% free-float threshold required for active trading.
This brought the businessman’s stake to about 3.61% now.
But listing rules also dictated that listed companies have to maintain a minimum 25% public shareholding spread. The stock was suspended on March 26,2015 for not meeting this requirement.
On Wednesday, HLCap said its major shareholder, HLFG, had completed a private placement of 27 million shares, which was equivalent to a 10.94% stake in HLCap.
This raised its public shareholding spread to 29.6%, from 18.67% at end-2014, thus meeting the 25% minimum requirement.
The placement price was not disclosed, but sources said it could have come at a discount.
The stock was last traded at RM9.38, giving it a market capitalisation of RM2.26bil. The company, in early November, paid out a dividend of 23 sen per share.
Following the exercise, HLFG now owns a direct 70.39% in HLCap, which has subsidiaries involved in investment banking, stockbroking, fund management and unit trust management services.
Quek controls 77.46% of HLFG, which in turn holds a 61.96% stake in HLB.
HLFG generates less trading interest as compared to its banking arm, which contributes substantially to the former’s profitability and whose market cap at RM36.2bil surpasses that of its parent company.