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MaybankExpanding Regional Investment Banking FranchiseExpanding Regional Investment Banking Franchise
Analyst Presentation6 January 2011
Slide 0
TABLE OF CONTENTS
TRANSACTION OVERVIEW
ABOUT KIM ENG
OUTCOME OF THE COMBINATION
SALIENT TRANSACTION TERMS & FINANCIAL IMPACT
CONCLUSION
Slide 1
TRANSACTION OVERVIEWMaybank Expands Regional Investment Banking Presence
Overview Agreements with Ronald Ooi and Yuanta Securities Asia Financial Services Limited (“Yuanta”)toacquire 44.6%1 of Kim Eng Holdings Limited (“Kim Eng”)
– S$3.10 per share
– Subject to certain conditions, including regulatory approvals from Bank Negara MalaysiaSubject to certain conditions, including regulatory approvals from Bank Negara Malaysia(“BNM”) and Monetary Authority of Singapore (“MAS”)
Upon completion, Maybank to conduct a Mandatory General Offer (“MGO”), in accordance withSingapore regulations, for up to 100% of Kim Eng shares
Intend to take Kim Eng privateIntend to take Kim Eng private
Total consideration of S$798mm in cash for initial 44.6%1 equity interest
Total consideration of S$1,789mm (RM4,256mm) in cash for 100% equity interest
Rationale In line with Maybank’s regional aspirations, accelerating its investment banking and equitiesb ild i ASEANbuild-out in ASEAN
A truly unique asset in ASEAN - size, pan-regional platform, market leadership, impressiveearnings track record and diversified earnings base
Underlying markets experiencing rapid growth
Strong distribution capabilities, with market leadership in Singapore (#4), Thailand (#1),Indonesia (#3) and the Philippines (#2), and a growing presence in Hong Kong, New York,London and Vietnam
Complementary footprint to drive realization of synergies
Slide 2
Experienced and highly regarded management team to be retained
Source: Market rankings from stock exchanges and management1. Based on total shares outstanding, net of treasury shares
TABLE OF CONTENTS
TRANSACTION OVERVIEW
ABOUT KIM ENG
OUTCOME OF THE COMBINATION
SALIENT DEAL TERMS & FINANCIAL IMPACT
CONCLUSION
Slide 3
KIM ENGASEAN’s Leading Securities Firm
Track Record of Over 35 Years
KE Strategic alliance with Yuanta. Acquired KE Thailand listed and
i l d d i MSCI I dStrategic alliance with MUFJ
Securities founded
20011988
London
1989 1990 1993
Philippines
1998
Yuanta Thailand and Ong Asia in Singapore
2002 2003
included in MSCI IndexEst. KE Absolute in HK
2007
Est. KE Capital Partners, a JV with MUFJ
2008 20101972
Hong Kong Indonesia, Malaysia, USFirst stock broker listed on SGX
Acquired stock broking firm Nithipat Capital & Securities in Thailand
JV with Heritage Trust Group
Vietnam Signed agreement for 70% shareholding in Inter-Pacific Securities in Malaysia
Brokerage Ranking1 Awards and Accoladesg g
Country Ranking Market Share Branches
Thailand #1 13% 41
Philippines #2 12% 4
Best Broker Award(2008, 2009, 2010)
Alpha Southeast Asia
Best Broker Award(2008, 2009, 2010)
Alpha Southeast Asia
Best Local Brokerage inBest Local Brokerage inStarMine Broker Rankings forStarMine Broker Rankings for
Best Broker Award(2010)
FinanceAsia
Best Broker Award(2010)
FinanceAsia
Philippines #2 12% 4
Indonesia #3 5% 6
Singapore #4 8% 3
Vi t #7 2% 5
Best Local Brokerage in Singapore (2009)
AsiaMoney Broker Poll of Polls
Best Local Brokerage in Singapore (2009)
AsiaMoney Broker Poll of Polls
StarMine Broker Rankings for STI Earnings Forecasts (2010)
StarMine
StarMine Broker Rankings for STI Earnings Forecasts (2010)
StarMine
Best Research Call of the Year in Southeast-Asia (2009)
Al h S th t A i
Best Research Call of the Year in Southeast-Asia (2009)
Al h S th t A i
Top 50 Largest Brands in Singapore (2008, 2009)
B d Fi
Top 50 Largest Brands in Singapore (2008, 2009)
B d Fi
Slide 4Source: Company website and filings. 1. Market rankings and market shares for 9 months 2010 from stock exchanges and management
Vietnam #7 2% 5 Alpha Southeast AsiaAlpha Southeast AsiaBrand FinanceBrand Finance
PERFORMANCE HIGHLIGHTSResilient Performance; Diversified Presence
580600
SGD mm
35%250 40%
SGD mm
Resilient Operating Income Sustained Net Income and Net MarginNet Income Net Margin
271
343 351 366
268 272300
450
94 102
149
8973
30%
26%
20%
24%27%
18%
100
150
200
20%
30%
0
150
2005 2006 2007 2008 2009 9M 2009 9M 2010
72 73
50
0
50
2005 2006 2007 2008 2009 9M 2009 9M 20100%
10%
2009 Revenue by Geography 2009 Revenue by Business
Diversified Presence in Over 10 Countries Brokerage is the Main Contributor
Indonesia4%
Others5%
Money Lending & Margin Financing
Others0.3%
Singapore54%Thailand
28%
Hong Kong10%
g10%
Fee Based6%
Slide 5Source: Company website & fillings
28%
Stockbroking84%
TABLE OF CONTENTS
TRANSACTION OVERVIEW
ABOUT KIM ENG
OUTCOME OF THE COMBINATION
SALIENT DEAL TERMS & FINANCIAL IMPACT
CONCLUSION
Slide 6
A LEAP TOWARDS ACHIEVING OUR ASPIRATIONSPlugging Critical Gaps within our Business Portfolio
By 2015
Our VisionOur Vision To be a Regional Financial Services LeaderTo be a Regional Financial Services Leader
Our MissionOur Mission Humanising Financial Services from the Heart of ASEANHumanising Financial Services from the Heart of ASEAN
Strategic ObjectivesStrategic Objectives 1. Undisputed #1 Retail Financial Services provider in Malaysia by2015
1. Undisputed #1 Retail Financial Services provider in Malaysia by2015
2. Leading ASEAN wholesale bank eventually expanding to MiddleEast, China & India
3. Domestic Insurance Champion and emerging regional player3. Domestic Insurance Champion and emerging regional player
4. Truly regional organisation, with ~40% of pre-tax profits derivedfrom international operations by 2015
Slide 7
5. Largest Islamic bank in ASEAN5. Largest Islamic bank in ASEAN
Critical Gaps
MAYBANK REGIONAL BANKING FRANCHISECompletes the Gap in Investment Banking and Equities for ASEAN
Geography Commercial / Islamic Banking Investment Banking Stock Broking
Malaysia
Singapore
Indonesia
Philippines
Thailand
Vietnam
Wholesale banking capabilities across ASEANExtends Maybank’s distribution capabilities to key global financial markets including Hong Kong London and New York
Enhanced Banking Platform including Hong Kong, London and New York
Commercial banking presence in Thailand remains the missing piece of the jigsaw– Kim Eng offers deep insight into the Thai market
– Allows Maybank to develop brand recognition
Entrance into Thailand Market
Slide 8
Allows Maybank to develop brand recognition
STRATEGIC RATIONALE
Strong trading volumes, fuelled by economic growth and liquidity in-flowsPotential for higher retail participation – driven by high savings rates and increasing investor sophistication
Capitalise on Robust Capital Markets’ Growth
1
Leading independent regional stockbroker– #4 in Singapore, #1 in Thailand, #3 in Indonesia, and #2 in the
PhilippinesASEAN’S Dominant Brokerage Platform
2
Client base of 200,000*
Distribution presence in key financial markets: ASEAN, Hong Kong, New York and London
Complementary geographical and product footprint3Improved banking franchise
– Wider distribution capabilities– Leveraged on Maybank’s strong balance sheet and client relationships– Cross-selling opportunities
Significant Synergy Opportunities
Experienced and well respected management team, with significant experience in building and growing businessesCore management team retained
Top-Notch Management Team
4
Slide 9
Notes: -Market ranking from stock exchanges and management* Based on latest available data
CAPITALISE ON ROBUST CAPITAL MARKETS’ GROWTH Asia Expected to Remain Robust
1
Attractive Economic Dynamics of Asian Markets¹ Trading Volume Growth of Key Asian Markets²
29%
24%35%
30% 28%19%
16%
6%3%
High Savings Rates (2009)
21%
8%
15%
28%
9%
Strong Volume Growth
(2005-09)
69%
3% 3%
0%
69%
34%
55% 7%
5% 5% 5%
6%6%
Strong Real GDP Growth
Continued Strength
17%
7%
26%
2% 1%
2%2%
(2009-2014E CAGR)
(YoY Growth)3
Slide 10
Source: 1. Economic Intelligence Unit and Euromonitor. Savings rate represents proportion of household disposable income that is saved2. World Federation of Exchanges members, Trading volume growth based on value. 3. YTD Nov 2010 vs YTD Nov 09
ASEAN’S DOMINANT BROKERAGE PLATFORMOur Expanded Presence with Kim Eng
2
Commercial BankingBrokerage / Investment BankingRetail BankingOther Services
Maybank
Ranking M. Share
#1 13%
Ranking M. Share
#4 7%
ASEAN Stockbroking Champion
Kim Eng also maintains distribution presence in key financial markets
Thailand Vietnam
Brokerage / Investment BankingOther Services3
Kim Eng#2 12%
#7 2%
#4 8%
#3 5%
yincluding Hong Kong, London and New York
PhilippinesMaybank: 50 branches
Kim Eng: 41 branches
Cambodia
Maybank: 9 branches
Maybank: 2 + 951 branchesKim Eng: 5 branches
Kim Eng: 4 branchesMaybank: 9 branches
Brunei
Maybank: 3 branches
MalaysiaMaybank: 386 branchesKim Eng: 6 branches
IndonesiaMaybank: 1+321branches2
Kim Eng: 6 branches
SingaporeMaybank: 22 branchesKim Eng: 3 branches
g
Slide 11
Source: Company websites, annual reports and presentations. Market ranking and market share from stock exchanges and management. Number of branches are as of latest available1. 95 branches via 20% owned An Binh Bank2. Via 97.5% owned PT Bank Internasional Indonesia Tbk3. Kim Eng’s other services include asset management, hedge fund services, property & real estate development, insurance and trust & fiduciary services
SIGNIFICANT SYNERGY OPPORTUNITIESHarnessing Synergies
3
Cross-selling
Mutual product offeringsTapping into Kim Eng’s client base of
Improved Investment Bankingand Underwriting Capability
Leveraging Maybank‘s strong balancesheet and client relationshipsTapping into Kim Eng s client base of
200,000sheet and client relationships
Other Kim Eng’s Business andOther gFootprint Expansion
Cash management support for cashbalances held in trustSupport for foreign exchange flowsand hedging
Maybank’s strong capital base cansupport Kim Eng’s growth initiatives(e.g. margin lending)Access to Thailand and Thai market
Enhanced Infrastructure
and hedgingImproved funding cost
Access to Thailand and Thai marketintelligence
Maybank’s extensive branch network tosupport expansion of stockbrokingpresenceOperational best practices in riskmanagement and IT delivery platform
Slide 12
management and IT delivery platform
TOP-NOTCH MANAGEMENT TEAMQuality and Depth of Talent
4
Ronald Ooi, Chairman and CEO
30+ years of industry experienceDirector of Kim Eng since 1979SGX committee member 1986 - 1999
Alternative Director to Lau Wai Kwok; Executive Vice President, Business Development30 years of industry experience in Asia and the US
Executive Director, Global Institutional Sales28+ years of industry experience Joined Kim Eng in 1979
Eunice Ho
Chief Financial Officer30+ years of general management experience in the securities, gaming and manufacturing industries
Lau Wai Kwok Judd Clarke Kinne
Executive Vice President and Head, Credit Risk Management / Retail Operations28 years of industry experience
Senior Vice President18 years of experience in stockbroking, electronic commerce and public accounting
Senior Vice President, Group Risk, Margin Finance17 years of experience in managing securities financing
Chuah Lai Hock Tay Ai KhimDaniel Kwek
Wu Wen Sun
Executive Vice President, IT & Operations / Chief Technology Officer20 years of experience in stockbroking industry
Ong Chew Kheng
Senior Vice President, KE Singapore; Advisor, KE Thailand; Executive Director – KE Vietnam18+ years of industry experience
Tan Pei-San
Executive Vice President, Office of the CEO13+ years of experience in securities and legal industry in the US and Singapore
Management team to be retained, with Ronald Ooi to continue as CEO₋ Oversee the integration, and execute a successful business plan for the combined entity₋ Management structure to be communicated early, to give clarity and direction
Comprehensive retention program to be rolled out to key employees prior to closing₋ Minimal overlap between the businesses, from a geographical and business line perspective
Slide 13
Dedicated steering committee to be established shortly₋ Implement and monitor all aspects of integration process (front office, operations / support, HR, IT, etc.)₋ Collaboration and cooperation on new business opportunities and realization of synergies
TABLE OF CONTENTS
TRANSACTION OVERVIEW
ABOUT KIM ENG
OUTCOME OF THE COMBINATION
SALIENT DEAL TERMS & FINANCIAL IMPACT
CONCLUSION
Slide 14
SALIENT TERMS
Offer Price S$3.10 in cash per Kim Eng share
– Premium of 15% to last closing price (5 January 2011) and 28% to 1-month VWAP
Aggregate transaction consideration of S$1 789 mm (RM4 256 mm)Aggregate transaction consideration of S$1,789 mm (RM4,256 mm)
Funded by internal and/or external funds
Valuation* Price to Book (Sep 2010A) of 1.91x
Price / Earnings (2009A) of 20.0x
Key Conditions Precedent
Amongst others, regulatory approvals including from BNM and MAS
Expected to be completed by April 2011
Management Ronald Ooi will continue to lead Kim Eng for a minimum of 3 years
B i l f Ki EBusiness as usual for Kim Eng
Maybank Group will appoint nominees to the Board of Kim Eng
Others Upon completion, Maybank to make an MGO, in accordance with Singapore regulations, toacquire up to 100% of Kim Eng shares
Do not plan to maintain/restore Kim Eng’s listing status and intend to exercise ourCompulsory Acquisition rights to acquire all remaining Kim Eng shares, if applicablethreshold is reached
Maybank to engage in discussions with regulators in Thailand and the Philippinesregarding possibility of a general offer for Kim Eng’s listed investee companies in those
Slide 15
regarding possibility of a general offer for Kim Eng s listed investee companies in thosemarkets
* Based on total shares outstanding, net of treasury shares
PRO FORMA EFFECTS Group Capital Ratios Remain Strong post AcquisitionMaybank Group – Risk Weighted Capital Ratios
Acquisition to be funded by internally generatedfunds and/or external funds
14.15% 13.61%12.38%
14.18%
Min requirement = 8.0%Group pro forma capital ratios remain healthy,and well above the minimum requirements, evenif fully funded via internal funds
– Our Dividend Reinvestment Plan (“DRP”),ll i d ith l t 90% t
q %
Maybank Level - Risk Weighted Capital Ratios
well-received with close to 90% acceptancerate, successfully strengthened our capital
The Group intends to boost our capital strengthvia the issuance of equity, debt or a combinationof both to fund business growth opportunities
As at 30 Sept 2010 Proforma for Div. & DRP (a)
Proforma (a) + 100% Krypton (b)
Proforma (b) + Capital Raising (Equity and/or
Sub-Debt)
13.95%13.28% 13.28% of both to fund business growth opportunities
Kim Eng has ample capital to grow its business
As the Acquisition is estimated to be completedby May 2011, it is not expected to have any
t i l ff t th i f th M b k
10.97%
Min requirement = 8.0%
material effect on the earnings of the MaybankGroup for the financial year ending 30 June 2011
As at 30 Sept 2010 Proforma for Div. & DRP (a)
Proforma (a) + 100% Krypton (b)
Proforma (b) + Capital Raising (Equity and/or
Slide 16
Source: Maybank & Kim Eng’s Sep 2010 unaudited financial statementsKey assumptions1. Adjusted for dividend payment and dividend reinvestment (“DRP”)2. Adjusted for redemption of RM1.0bn sub-debt
3. Assumes acquisition of 100% of Kim Eng’s equity4. Assumes all Kim Eng's total assets as at 30 Sep 2010 are included in the
computation for risk weighted assets
Sub-Debt)
PRO FORMA EFFECTS Post Acquisition, Revenue Contribution from Overseas Increases from 29% to 33%
+7%Maybank – FY10 (ended Jun ’10)
RM12,872 mmKim Eng – FY09 (ended Dec ’09)
RM871mmPro Forma Combination
RM13,743 mm
Others4%
Others5%Indonesia
Others4%
Indonesia
+ =Malaysia
71%
4%Indonesia
15%
Singapore11%
Singapore54%
5%Indonesia4%
Hong Kong10%
4%14%
Thailand2%
Hong Kong1%
SingaporeMalaysia
67%71%11%Thailand
28%
14%67%
Slide 17
Assumes FX of SGD1.00 : RM2.379 Source: Based on management presentations and the latest audited reports of Kim Eng and Maybank
PRO FORMA EFFECTS Post Acquisition, PBT from Overseas Increases from 21% to 25%
+6%Maybank – FY10 (ended Jun ’10)
RM5,370mmKim Eng – FY09 (ended Dec ’09)
RM323mmPro Forma Combination
RM5,693mm
Others1%Indonesia Indonesia
Others5% Hong Kong
Indonesia4%
Others
+ =Malaysia
1%4%
Singapore15%
Thailand
Hong Kong5%
Indonesia4%
5%
Singapore55% Malaysia
75%
Singapore18%
Hong Kong0.3%
Thailand2%
4%2%
79% 31% 75%
Slide 18
Assumes FX of SGD1.00 : RM2.379 Source: Based on management presentations and the latest audited reports of Kim Eng and Maybank
PRO FORMA EFFECTS Post Acquisition, Investment Banking Becomes a Larger Business Driver with 8% Contribution
Revenue
ConsumerI t'l B kiConsumer Int'l Banking
+7%Maybank – FY10 (ended Jun ’10)RM12,872mm
Kim Eng – FY09 (ended Dec ’09)RM871mm
Pro Forma CombinationRM13,743mm
Consumer Banking
33%
Int'l Banking28%
Investment
Insurance & Asset Mgmt
8%
Investment Banking100%
Banking31%
26%
Insurance & Asset Mgmt
7%+ =
Profit Before Taxation Contribution
Business & Corporate Banking
19%Global Markets
11%
Investment Banking
2%
Global Markets10%
Investment Banking
8%
Business & Corporate Banking
18%
Maybank – FY10 (ended Jun ’10)RM5,370mm
Kim Eng – FY09 (ended Dec ’09)RM323mm
Pro Forma CombinationRM5,693mm
+6%
Consumer Banking
27%Insurance &
Int'l Banking21%
Consumer
Int'l Banking20%
+ =
27%Insurance & Asset Mgmt
7%
Investment Banking
2% Business & Corporate
Investment Banking100%
Banking25%
Business & Corporate
Investment Banking
Insurance & Asset Mgmt
7%
Slide 19
Assumes FX of SGD1.00 : RM2.379. Assumes pro-rated inter-segmental revenue for each of Maybank’s product segmentSource: Based on the latest audited reports of Kim Eng and Maybank
Global Markets22%
Corporate Banking
21%
pBanking
19%
8%Global Markets
21%
INDICATIVE TIMELINE
Date: 6 Jan 2011
~3 Months
April
(T)T + 14 to 21 Days
Minimum 28 days
May
Execution and Announcement of SPAs with
Obtain regulatory approvals
Despatch of Offer
Document /
MGO Offer Period
of SPAs with Yuanta and Chairman Ronald Ooi
Completion of SPAsAnnouncement of MGO
/
Launch of MGO Closing of MGO (earliest possible date, assuming no MGOextensions of Offer Period)*
Note:* Latest possible closing date in June, being 60 days from despatch of Offer Document
Slide 20
TABLE OF CONTENTS
TRANSACTION OVERVIEW
ABOUT KIM ENG
OUTCOME OF THE COMBINATION
SALIENT DEAL TERMS & FINANCIAL IMPACT
CONCLUSION
Slide 21
MAYBANK AND KIM ENGExciting Times Ahead
Extends Investment Banking scope and reach in ASEAN, in line with our regional aspirationsExtends Investment Banking scope and reach in ASEAN, in line with our regional aspirations
Complementary business and geographic footprintComplementary business and geographic footprint
Strong synergy potential through a complete banking platformStrong synergy potential through a complete banking platform
Attractive opportunity to gain access to high growth markets with solid fundamentalsAttractive opportunity to gain access to high growth markets with solid fundamentals
Key management retained to ensure business continuity and continued growthKey management retained to ensure business continuity and continued growth
Slide 22
DISCLAIMER
Cautionary Note on Forward-Looking Statements
All statements other than statements of historical facts included in this document are or may be forward-looking statements. Forward-looking statements include but are not limited to those using words such as “ ” “ i i ” “b li ” “i d” “ j ” “ l ” “ ” “f ” d i il i“expect”, “anticipate”, “believe”, “intend”, “project”, “plan”, “strategy”, “forecast” and similar expressions or future or conditional verbs such as forecast “will”, “would”, “should”, “could”, “may” and “might”. These statements reflect the Aseam Credit Sdn Bhd’s (“Offeror” or “ACSB”) and Maybank’s current expectations, beliefs, hopes, intentions or strategies regarding the future and assumptions in light of currently available information. Such forward-looking statements are not guarantees of future performance or events and involve known and unknown risks and uncertainties Accordingly actual results or outcomes may differ materially from thoseunknown risks and uncertainties. Accordingly, actual results or outcomes may differ materially from those described in such forward-looking statements. Shareholders and investors should not place undue reliance on such forward-looking statements, and neither the Offeror nor Maybank nor Nomura Singapore Limited, as financial adviser to the Offeror, undertakes any obligation to update publicly or revise any forward-looking statements, subject to compliance with all applicable laws and regulations and/or rules of the Singapore Exchange Securities Trading Limited and/or any other regulatory or supervisory body or agency.
Responsibility Statement
The directors of ACSB and Maybank (including any who may have delegated detailed supervision of this announcement) have taken all reasonable care to ensure that the facts stated and all opinions expressed in this
t f i d t d th t t i l f t h b itt d f thi t dannouncement are fair and accurate and that no material facts have been omitted from this announcement, and they jointly and severally accept responsibility accordingly. Where any information has been extracted or reproduced from published or otherwise publicly available sources (including, without limitation, in relation to the Company), the sole responsibility of the directors of ACSB and Maybank has been to ensure through reasonable enquires that such information has been accurately and correctly extracted from such sources or, as the case may be reflected or reproduced in this announcement
Slide 23
the case may be, reflected or reproduced in this announcement.