HL Capital jumps on buyout offer

Hong Leong Capital Bhd, a unit of the Malaysian insurance and banking group controlled by billionaire Quek Leng Chan, surged the most in more than 14 years after receiving a buyout offer from its parent. Hong Leong Capital, which holds the group’s investment banking assets, jumped 25 per cent close at RM1.78 in Kuala Lumpur today, the biggest gain since September 1998. The stock was the day’s biggest gainer on the Bursa Malaysia Finance Index. Hong Leong Financial Group Bhd, which already owns 79.1 per cent of Hong Leong Capital, offered RM1.71 per share for the remaining stake it doesn’t already own, according to yesterday’s Kuala Lumpur stock exchange filing. That’s a 20 per cent premium to its last traded price of RM1.42 before the counter was halted on Jan. 11. “This would be an opportunity for shareholders to cash out at a decent price,” Desmond Ch’ng, an analyst at Malayan Banking Bhd, wrote in a report today. “Hong Leong Capital has historically traded at a discount to book value given the lack of liquidity and interest.” The proposal would streamline the Hong Leong group, cutting its listed financial units in Kuala Lumpur to two from three. Hong Leong Financial said it doesn’t plan to maintain Hong Leong Capital’s listing status. The buyout should have a neutral financial impact on Hong Leong Financial, Ch’ng said, maintaining Maybank’s buy rating with a higher price target of RM15.70, compared with RM15.60 previously. Hong Leong Financial closed unchanged at RM14.42, while the benchmark FTSE Bursa Malaysia KLCI Index rose 0.1 per cent. Hong Leong Bank Bhd, the group’s retail banking unit which isn’t involved in the transaction, was also unchanged at RM14.98. Hong Leong Capital provides investment banking, stock and futures broking as well as fund-management services through its units Hong Leong Investment Bank Bhd and Hong Leong Asset Management Bhd. -- Bloomberg