KUCHING: CIMB Group Holdings Bhd’s (CIMB) proposed acquisition of Finansa Asset Management Ltd (FAM) in Thailand is expected to enhance CIMB Principal Asset Management Company’s position as a leading asset management company in Thailand.
The research division of MIDF Amanah Investment Bank Bhd (MIDF Research) in a report said the acquisition via 60 per cent owned indirect subsidiary CIMB-Principal Asset Management Company Ltd Thailand (CPAMT) will increase its asset under management (AUM) to 25.54 billion baht, ranking eighth in the asset management industry.
At the same time, CPAMT’s AUM of total mutual funds will rise to 44.13 billion baht, ranking 11th in the industry.
Additionally, MIDF Research noted that the acquisition will enable CPAMT to leverage on FAM’s strength in provident fund management and registrar business to complement its strength in retail fund management in Thailand.
Meanwhile, MIDF Research forecasted the acquisition to have minimal impact on CIMB Group’s earnings and capital ratios.
Based on CIMB Group’s 60 per cent stake in CPAM, the acquisition of FAM accounted for less than one per cent of the group’s profit before tax in the first quarter of financial year 2014 (1QFY14).
The research firm noted the proposed acquisition of FAM is expected to be funded internally.
On another note, MIDF Research said FAM is part of the Finansa Group, a diversified financial services group that is listed on the stock exchange of Thailand with a market capitalisation of approximately 3.7 billion baht.
The research firm revealed that FAM, formerly known as BFIT Asset Management, was established in 1969 with a fund management licence.
MIDF Research pointed out that FAM’s key strength lies in its leadership position in provident fund management in Thailand with an AUM size of THB14 billion or about RM1.37 billion.
As for the valuation of CIMB, the research firm believed that the operating environment for the group’s key international markets namely Indonesia and Thailand to remain challenging.
Therefore, the research firm maintains its neutral view on the banking group’s near term prospects.