KUALA LUMPUR: CIMB Group Holdings Bhd is weighing a privatisation of its Indonesian arm, CIMB Niaga, as market volatility dims prospects for a secondary share offering.
The second-largest Malaysian bank by assets is also considering a placement of CIMB Niaga shares to strategic investors, analysts said.
The options follow revised minimum free float rules requiring the group to reduce its 91.4 per cent stake in CIMB Niaga to no more than 87.5 per cent by March 2027 and 85 per cent by March 2028, as Indonesia seeks to improve the investability of its stock market.
However, the prospect of MSCI downgrading Indonesia from emerging market to standalone market status has triggered a broad sell-off in Indonesian equities, weakening the appeal of new share offerings.
Public Investment Bank Bhd analyst Wong Ling Ling said the privatisation proposal remained at a "preliminary stage with regulatory hurdles to overcome".
"The group remains optimistic on CIMB Niaga's operations, with growth predominantly driven by wealth management, selected SMEs as well as Shariah banking," Wong noted.
PublicInvest estimated that buying out CIMB Niaga's minority shareholders could cost about RM800 million.
Hong Leong Investment Bank said a privatisation could simplify CIMB Niaga's ownership structure and give CIMB greater flexibility to execute its longer-term strategy in Indonesia.
"While the eventual structure remains unclear, we believe a Niaga privatisation could still require some deployment of group capital, particularly if the chosen structure involves buying out part of the remaining minority interests," it added.
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