TPG to invest up to $150m in Malaysian bank

The private equity giant, heavily active in Southeast Asia’s financial services sector, has purchased bonds and warrants in Kuala Lumpur-based bank CIMB Group. TPG-affiliate Northstar has also agreed a $1.3bn stake in Indonesian coal mining company Bumi Resources.

US private equity firm TPG has agreed to invest up to $150 million in Malaysian retail and investment bank CIMB Group, the firm’s latest foray into Southeast Asian financial services.

The Fort Worth, Texas-based firm will purchase up to $150 million in two-year senior unsecured CIMB bonds, which will yield an annual coupon of 3 percent. TPG will also receive 50 million warrants to purchase ordinary shares of Bumiputra-Commerce Holdings, CIMB’s publicly listed parent company, at a strike price of $2.83 per share and exercisable at any time over a five year period, according to a statement from CIMB.

TPG declined to comment.

CIMB is Malaysia’s second largest financial services provider, providing consumer banking, investment banking, Islamic banking and asset management services. The Kuala Lumpur-based bank, which maintains regional offices in Singapore, Indonesia and Thailand, said proceeds from the TPG investment will be used to repay existing debt and fund working capital for Bumiputra-Commerce

The stake in CIMB represents the latest in a string of financial services investments TPG and its Indonesia-based affiliate, Northstar, have completed in Southeast Asia over the past few years.

Last year, TPG and Northstar partnered in the acquisition of a 72 percent stake in Indonesia-based Bank Tabungan Pensiunan Nasional for a reported $200 million.

A TPG-consortium currently comprises the second largest group of shareholders in BankThai, owning 42 percent of the commercial bank. CIMB Group is in the midst of completing its own purchase of a 42 percent stake in BankThai. On completion of the purchase, CIMB Group will make a tender offer for the remaining shares it does not own.

Bumiputra-Commerce will only issue its bond-warrants to TPG after the acquisition of BankThai. Bumiputra-Commerce expects to issue the bond-warrants by the first quarter of 2009.

In related news, Northstar has agreed a $1.3 billion deal for a 35 percent stake in Indonesia-based coal mining company Bumi Resources, according to a statement from Bumi’s parent company. It was still unclear at press time whether Northstar, led by former Goldman Sachs banker Patrick Walujo, was leading a consortium including several Southeast Asian mining companies or whether the firm was purchasing a 35 percent stake on its own.

Bumi consists of four primary business units: an eco-coal operation for international and domestic power generation companies; a thermal coal operating which Bumi acquired from BP and Rio Tinto in 2003; an oil and gas business based in Yemen; and a 60 percent ownership stake in Enercorp, a marketing firm responsible for the marketing of Bumi energy products for the domestic Indonesian market.