CIMB Group Holdings Berhad ("CIMB" or "the Group") today announced that it had signed agreements with the Principal Financial Group ("Principal") for the latter to increase its ownership in the CIMB-Principal Asset Management Group and CIMB-Principal Islamic Asset Management. The agreements will increase Principal's stake to 60 percent with CIMB retaining 40 percent ownership in both entities. The joint ventures will continue to be co-managed by both companies.
This transaction is expected to be completed in the second quarter of 2018 and is subject to the relevant regulatory approvals.
"As a leading ASEAN universal bank, asset management continues to be an integral part of our regional banking business. This shareholding realignment will ensure that our asset management joint venture with Principal achieves its maximum potential and continues to sustainably create value for CIMB," said Tengku Dato' Sri Zafrul Aziz, Group Chief Executive Officer, CIMB Group. "Scale and extensive investment expertise are important to this business and we believe this strategic realignment will enhance the value proposition of the joint venture to enable us to serve our customers better."
This exercise will see CIMB Group recording a gain on disposal of approximately RM950 million and will also see its CET1 ratio improve by approximately 18 bps.
"This realignment also allows us to realize attractive gains from our strategic investment in CIMB-Principal, and to continue participating in the joint venture as a 40% shareholder," added Zafrul.
CIMB and Principal have partnered in the region since 2004 and have successfully grown their operations across Malaysia, Singapore, Indonesia and Thailand. The CIMB-Principal Asset Management group of companies has more than MYR70 billion in AUM and is one of the largest asset managers in the region. CIMB-Principal Islamic Asset Management has been managing Islamic institutional mandates since 2008 and is the sole end-to-end Islamic asset management boutique of the CIMB Group and Principal Financial Group.