Public Bank Acquires LPI Capital, Strengthening Insurance Market Presence

KUALA LUMPUR — Public Bank is gearing up to acquire LPI Capital, a significant move that could reshape the financial landscape in Malaysia. This strategic acquisition stems from the estate of the late Tan Sri Teh Hong Piow and Consolidated Teh Holdings Sdn Bhd (ConTeh) deciding to divest a substantial holding of 175,896,000 ordinary shares, equating to a 44.15% stake in LPI Capital Bhd. This decision aligns with the Financial Services Act (FSA) requirements. Public Bank, founded by the late Hong Piow, is set to acquire these shares for RM1.72 billion, pricing each at RM9.80, a figure notably below LPI’s last traded price of RM13.

Teh Li Shian Diona, Hong Piow’s youngest daughter, disclosed that the estate and ConTeh plan a restricted offer for sale of shares in Public Bank over the next five years. In a press conference, Public Bank’s CEO Tan Sri Tay Ah Lek emphasized the strategic importance of this acquisition, which aligns with the bank’s broader goals of expanding its presence and offerings in the general insurance market in Malaysia. The move towards a Universal Banking Model marks a significant pivot from organic growth, with Tay eyeing future acquisition opportunities, particularly in the Indo-China region.

LPI, through its subsidiary Lonpac Insurance Bhd, is a key player in general insurance, operating 21 branches in Malaysia and one in Singapore, while also having interests in Cambodia. The proposed acquisition, backed by approvals from the Finance Ministry and Bank Negara, is set to bolster Public Bank’s market presence. Moreover, the proposed mandatory general offer (MGO) positions Public Bank to acquire the remaining shares it doesn’t already hold, subject to shareholder approval.

Diona clarified the mechanics of the transaction, noting that the equity reshuffle is essentially moving shares within the late Hong Piow’s legacy structures while capitalizing on synergies between Public Bank and LPI. The bank insists on maintaining LPI’s listing on the Main Market of Bursa Malaysia, ensuring continued transparency and market presence.

The broader implications for Public Bank are profound. Leveraging LPI’s market access, Public Bank plans to enhance its distribution capabilities through its extensive branch network. Simultaneously, LPI can utilize Public Bank’s infrastructure to expand its reach, offering a potent synergy between banking and insurance services.

As the estate gradually reduces its stake in Public Bank to comply with the FSA regulations, it symbolizes a new era for both entities, maintaining their legacy while strategically aligning for future growth. This strategic acquisition not only solidifies Public Bank’s foothold in the insurance sector but also reflects a nuanced approach to conforming to regulatory standards while seizing market opportunities.

Such pivotal corporate maneuvering underscores the dynamic nature of Malaysia’s financial services sector and sets the stage for what could be another transformative chapter in Public Bank’s storied history.