KUALA LUMPUR: Affin Hwang Investment Bank Bhd (Affin Hwang IB) and select key senior management in the company have entered into a conditional deal to divest 7.59 million shares or 68.35% stake in Affin Hwang Asset Management Bhd (Affin Hwang AM) to CVC Capital Partners.

       In a bourse filing, Affin Hwang IB, on behalf of parent company Affin Bank Bhd, said it had entered into a conditional share sale and purchase agreement with Starlight Asset Sdn Bhd, a company controlled by CVC Capital Partners, for the proposed divestment for a provisional cash consideration of RM1.54bil.

       Under the proposal, Affin Hwang IB would dispose of seven million shares or 63% stake in the Affin Hwang AM while the selected key senior management will sell 594,338 units or 5.35% stake.

       "The proposed divestment is a unique opportunity for ABB Group to realise en bloc a control premium on its stake in AHAM, resulting in a pro forma net gain of approximately RM1,037.2mil for ABB Group.

       "This will significantly enhance ABB Group’s capital position which will allow ABB Group to add substantial scale in its lending operations and/or enhance its capital buffer.

       "In this regard, ABB Group’s Common Equity Tier 1 (CET1) ratio is expected to improve by 2.89% from 14.52% as at 31 December 2020 to 17.41% upon completion of the Proposed Divestment," said the group.

       Upon completion of the proposed divestment, Affin Hwang AM will cease to be a subsidiary of Affin Hwang IB and the financial results of Affin Hwang AM will be deconsolidated from Affin Bank and its subsidiaries’ consolidated financial statements.

       For the financial year ended Dec 31, 2020, Affin Hwang AM group posted an audited profit after tax of RM114.3mil.

       There are audited net assets of RM191.6mil attributable to owners of Affin Hwang AM group as at Dec 31, 2020.

       Affin Bank's cost of investment in Affin Hwang AM was RM282.1mil based on the group's financial statement for the financial year ended Dec 31, 2020.