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Malaysia's Affin buys Singapore's Hwang-DBS

KUALA LUMPUR -- Affin Holdings completed the half a billion dollar acquisition of Hwang-DBS investment bank on Apr. 7. The 1.4 billion ringgit ($518 million) deal was made as part of Affin's ambitions to grow in the wealth management business.

     The buy-out, which will be funded by bridge loans via issuance of new shares of up to 1.25 billion ringgit, will lift Affin into one of the top 5 asset managers in the country. It will manage about 28 billion ringgit in combined assets.

     The purchase also included two asset management entities and a futures brokerage.

     Affin said the merger will enable it to create revenue of about 86 million ringgit over the next three years through cost cutting and customer base expansion. As well as taking on DBS' customers, Affin plans to consolidate back office operations at the two companies.

     With the acquisition, the company said it will begin offering investment advisory services, a lucrative business currently dominated by a few major companies. "We specifically want to target wealth management as this is now the fastest growing market," Maimoonah Hussain, Affin Investment Bank managing director, said at a news conference.

     Affin is backed by the Malaysian Armed Forces fund. Smaller banking groups in Malaysia have in recent years merged and collaborates to compete with bigger players such as Maybank and CIMB, which have evolved into international banks.

     RHB Capital two years ago took over the smaller OSK investment bank. In 2011, Eon Bank was absorbed by the Hong Leong group. Affin in January tied up with Japan's Daiwa Securities to share research report distribution and work together on corporate clients.

     Hwang was 100% owned by the Hwang-DBS group, whose major shareholder is Singapore's DBS Bank. That company is in turn controlled by the state-owned Temasek.

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