S& Poor to buy stake in Malaysia’s RAM

Petaling Jaya: Standard & Poor’s (S&P) is in talks with RAM Holdings Bhd to acquire a stake in the latter and the deal is expected to close by early next year.

Sources told StarBiz that both parties had been in talks for quite a while and had reached the final stage of negotiation, adding that they were expected to make a formal announcement early next year.

“RAM Holdings has established affiliation with S&P for quite some time and S&P is interested to own a stake in RAM Holdings after a long relationship,” said the sources.

The sources said the deal was believed to be a good tie-up between two companies for better synergy and strength, adding that S&P did not own any stake in RAM Holdings now.

When contacted, RAM Holdings confirmed the negotiations by saying: “We are unable to release a statement at this point in time because we are still in discussion with S&P.”

S&P did not reply to an email enquiring on the stake deal at press time.

According to RAM Holdings’ website, the substantial shareholders of the company include CIMB Bank Bhd (14.425%), RHB Bank Bhd (8.85%), Malayan Banking Bhd (6.9%) and Public Bank Bhd (5.325%).

For the financial year ended Dec 31, 2009, the group registered a net profit of RM7.6mil, 33% higher than the RM5.7mil a year ago. Its revenue was RM49.3mil, up from RM48.3mil in the previous year.

From a bond market’s perspective, MCIS Zurich Insurance Bhd fixed income head Michael Chang said it was likely to enhance the value proposition of RAM Holdings if the stake acquisition went through.

“RAM Holdings has already established affiliations with S&P as part of RAM’s longer-term vision. It is likely that there is already a mutual transfer of technical knowhow over time between the two entities,” he said.

He said the move was also probably a testament of S&P’s confidence in RAM Holdings’ commendable and rigorous rating capabilities.

“RAM Holdings has already been making a foray into developing debt markets like Sri Lanka, Bangladesh, Pakistan and Kazakhstan. With S&P’s eventually ownership, it would raise RAM Holdings’ profile as a more established rating agency internationally and maybe open up new markets for RAM Holdings,” he said.

Chang said he hoped the bonds that RAM rated domestically for the corporate bond market would also see an increase in liquidity when RAM’s ratings received recognition internationally as it could potentially tap on an enlarged investor base.