CIMB buying Singapore brokerage
Bloomberg News
January 14, 2005
Khoo Hsu Chuang and Chan Tien Hin 

KUALA LUMPUR CIMB, Malaysia's largest investment bank, said it would buy G.K. Goh Holdings' stockbroking business for 555 million ringgit, or $146 million, expanding in Singapore as stock markets of the two countries strive to build closer links.
 
CIMB will fund the purchase by selling 93.7 million new shares to its parent, Commerce Asset-Holding, which in turn will sell 26.3 million CIMB shares to minority stockholders in its investment bank, said CIMB's chief executive, Nazir Razak.
 
G.K. Goh shares surged when they resumed trading in Singapore after being suspended for the announcement.
 
The Malaysian investment bank, which bought 51 percent of Niaga Sekuritas, an Indonesian brokerage firm, in 2003, is expanding in Singapore before a planned alliance that will allow Singaporean and Malaysian shares to be traded through both countries' stock exchanges. Investment links between the nations have increased since Abdullah Ahmad Badawi replaced Mahathir bin Mohamad as Malaysia's prime minister in November 2003.
 
"It's good for CIMB and it shows that Malaysian companies are starting to be more outward looking," said Teng Ngiek Lian, a fund manager at Target Asset Management in Singapore. "This will pave the way for cross-listings between exchanges in Singapore and Malaysia."
 
The purchase gives the Malaysian company a foothold in Indonesia, Hong Kong, London, Thailand and the United States. Founded in 1979, G.K. Goh is Singapore's No. 2 brokerage firm.
 
CIMB will raise 421 million ringgit selling shares to its parent, funding the rest of the purchase from its own resources.
 
The deal "will dramatically change CIMB's growth prospects," helping the company "become a significant regional player," said Nazir, who is the younger brother of Malaysia's deputy prime minister, Najib Razak.
 
G.K. Goh reported a 59 percent drop in earnings for the three months that ended Sept. 30, to 3 million Singapore dollars, or $1.8 million. Shares of G.K. Goh Holdings closed at 96 Singapore cents, up 9.04 percent.
 
Singapore brokerage firms have been consolidating and cutting costs to stay afloat because of increased competition from foreign brokers and pressure on margins after the government deregulated stock-trading commissions, a process completed in October 2000.
 
"The broking industry is competitive and brokers' commissions have been coming down," said Pang Shun Pen, a fund manager at HSZ Singapore. "For G.K. Goh to have a tie-up with someone in Malaysia, that would strengthen their position."

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