'Maybank may find it tough to get BII buyer'

Maybank says the bank will not sell BII at below 510 rupiah (17 sen) per share, which is the price it paid to buy the bank back in 2008.

KUALA LUMPUR: Malayan Banking Bhd (Maybank), which has to pare its stake in Bank Internasional Indonesia (BII), may find it tough to find buyers at the price it wants, analysts said.

Maybank chairman Tan Sri Megat Zaharuddin Megat Mohd Nor told reporters in Indonesia on Monday that the bank will not sell BII at below 510 rupiah (17 sen) per share, which is the price it paid to buy the bank back in 2008.

Maybank is required by Indonesian rules to cut its stake in BII to at least 80 per cent from 97 per cent now. It has asked for several extensions to undertake the exercise, the latest deadline being June this year.

It could could raise 5 trillion rupiah (RM1.7 billion) from the sale, noted RHB Research.

"However, we think it would be challenging for Maybank to find buyers at such price levels given current market conditions and especially valuations.

"At 510 rupiah a share, this is at a 21 per cent premium to BII's last traded price of 420 rupiah (14 sen) and implies a (price to book value) of 3.8 times for a bank with a return-on-equity (ROE) of 10 per cent (based on 2011 annualised numbers).

"This, in our view, appears pricey as compared to valuations of larger peers (Bank Rakyat, Bank Mandiri and BCA), which are currently trading at price-to-book of around 2.5 to 4.7 times, but offer superior ROEs of 23.5 per cent to 32.7 per cent," its analyst wrote in a report yesterday.

Aberdeen Asset Management's head of equities, Abdul Jalil Rasheed, agreed.

"It may be quite tough to find a buyer at that kind of price, and for a small stake, despite there being interest in Indonesia's banking market," he told Business Times.

Maybank has hired investment bank UBS to handle the stake sale.