KUALA LUMPUR (April 6) : Bank Negara Malaysia (BNM) has granted approval for Malaysia Building Society Bhd (MBSB) to commence negotiations to acquire Malaysian Industrial Development Finance Bhd (MIDF) from Permodalan Nasional Bhd (PNB).

In a bourse filing on Wednesday, MBSB said BNM had vide its letter dated April 6, stated it has no objection for MBSB to enter into discussions with PNB to explore the possibility of undertaking an acquisition of the 100% shareholding in MIDF which is held by PNB.

The approval is valid for a period of six months from the date of its letter.

MIDF is a diversified group financial services provider with three core businesses, namely investment banking, asset management and development finance.

It is also considered a non-prescribed development financial institution established by the government with a specific mandate to develop and promote key sectors that are considered of strategic importance to the overall socio-economic development objectives of the country. These strategic sectors include agriculture, small and medium enterprises (SMEs), infrastructure, maritime, export-oriented sector, as well as capital-intensive and high-technology industries.

Back in 2019, a merger plan was proposed between MIDF and Al Rajhi Banking & Investment Corp (M) Bhd (Al Rajhi Malaysia), pursued by the latter’s parent Al Rajhi Bank. However, it was called off in 2020 after the parties involved failed to come to an agreement on whether to implement Malaysian or Saudi shariah law on the merged entity, according to reports.

The proposal valued MIDF at about one time book value of RM1.7 billion at the time, The Edge Weekly reported in its Nov 4-10, 2019 edition, quoting sources.

In 2020, MBSB’s late president and CEO Datuk Seri Ahmad Zaini Othman said in an interview with The Edge that the 2020-2022 period will see the development bank carving a niche for itself in Islamic trade financing, while making sizeable investments in the fintech space.

MBSB acquired Asian Finance Bank back in 2018, which was then renamed to MBSB Bank via a rebranding exercise. The acquisition marked a significant milestone for MBSB as it transitioned to becoming one of the nation's largest Islamic banks.

According to MBSB latest annual report, MBSB has 47 branches nationwide as of Feb 28, 2021.

The Employees Provident Fund (EPF) is the largest shareholder in MBSB, holding a 65.39% stake in the company.

MBSB shares closed four sen or 6.67% higher at 64 sen on Wednesday (April 6), valuing the group at RM4.3 billion. Year to date, the counter has risen 18.52%.