OSK HAS TO SELL PROPERTY WING BY END 2008

January 8 2007

FINANCIAL group OSK Holdings Bhd will have to sell its property business to get its investment bank licence, under a condition set by the financial industry regulators.

OSK has a controlling 64 per cent in OSK Property Holdings Bhd, a medium-sized builder that is developing townships in Kedah, Seremban and Kajang.

It has until December 31 2008 to sell this stake, the company said in a statement on December 29. However, the sale has no further restrictions. This means that Ong Leong Huat, who owns about 30 per cent of OSK, is free to make a bid for the property arm. He also holds 5.7 per cent of OSK Property, its 2005 annual report showed.

"OSK can sell the shares to anyone as long as there is a good offer price. "There are no restrictions," a company source said. The 64 per cent block in OSK Property would cost some RM76.8 million based on the stock's last closing price of RM1.28. But OSK could also get proposals from other bidders, which could include listed property developers.
OSK's subsidiary OSK Securities Sdn Bhd was recently awarded a merchant banking licence by the Finance Ministry.

The licence enables OSK Securities, which will change its name to OSK Investment Bank Bhd by March, to be transformed from a universal broker into an investment bank.
"According to Bank Negara Malaysia's guideline, the holding company of a banking institution is not allowed to hold an investment in a property firm.

"As such, it is anticipated that OSK will sell all its shares in OSK Property," the source said.
Money earned from the deal would be used by OSK to invest in expansions in new markets, the source added.

For the nine months ended September 30 2006, OSK Property contributed about 5.4 per cent, or RM6.45 million, to the group's profit before tax of RM119.5 million.

Source : BusinessTimes (by Sharen Kaur, http://www.btimes.com.my/Current_News/BT/Monday/Frontpage/BT602513.txt/Article/)