This article first appeared in The Edge Malaysia Weekly on December 1, 2025 – December 7, 2025

AFFIN Bank Bhd (KL:AFFIN), which is set to re-enter the asset management space through its acquisition of Pheim Asset Management Sdn Bhd, plans to rapidly grow assets under management (AUM) to some RM6 billion in the next five years in a bid to expand its fee-based income, sources say.

Pheim currently has AUM of about RM876 million, which makes it a relatively small player in the business. For perspective, AHAM Asset Management Bhd, the country’s third largest private asset management firm, had AUM of about RM89 billion as at end-2024.  The top two players are Public Mutual Bhd and Principal Asset Management Bhd. 

According to sources, Affin Bank plans to rapidly scale AUM upon acquiring Pheim. “It should quite easily reach its target [of about RM6 billion] well before the five-year mark of 2030,” one of the sources opines to The Edge.

Affin Bank is aiming to tap funds from several sources, including the Sarawak Sovereign Wealth Future Fund, external investment managers and high-net-worth individuals from the bank’s premium and private banking segments, the sources say. Moreover, they note that Affin Bank itself can deploy some of its treasury money into the fund’s fixed income investments.

The Sarawak Sovereign Wealth Future Fund, which invests the state’s wealth, began operations last year with an initial allocation of RM8 billion. The state is Affin Bank’s largest shareholder, with a 31.25% stake.

However, even with a targeted AUM of RM6 billion, Affin Bank would still be a relatively small player in the industry and, according to sources, would be open to acquiring another asset management firm should the opportunity arise at the right price.


Affin Bank and Pheim founder/executive chairman Tan Chong Koay declined comment when contacted.

Affin Bank exited the asset management industry in July 2022 when it sold its 63% stake in AHAM — then known as Affin Hwang Asset Management Bhd — to private equity group CVC Capital Partners for RM1.42 billion.

At the time, many were surprised that it had decided to let go of Affin Hwang given that the business was a major contributor to its earnings. Affin Bank CEO Datuk Wan Razly Abdullah Wan Ali indicated at the time that CVC’s offer — which translated into a price-to-AUM of 3.08%, above the average of 2.64% for previous mergers and acquisitions transactions involving asset management companies since 2014 — was too good to refuse as it came at a time when the group urgently needed funds to feed its fast-growing Islamic banking business.

The sale also significantly strengthened Affin Bank’s capital position. Soon after, it became widely known in the industry that the lender — the second smallest of Malaysia’s eight banking groups — was looking to acquire complementary businesses such as insurance and asset management, and potentially even a bank, as part of its plan to scale up.

Hence, the planned acquisition of Pheim does not come as a surprise. Affin Bank announced, on Nov 20, that it had entered into a conditional share purchase agreement to acquire 100% of Pheim for RM50 million cash in its bid to become a universal bank. (A universal bank refers to a financial institution that offers a full range of banking and financial services under one roof.)

The new business isn’t likely to be a major contributor to the group’s earnings anytime soon, but it will help grow its fee-based income.

“For every RM1 billion AUM, it is expected to raise RM2 million to RM2.5 million worth of fee income,” says MBSB Research in a Nov 21 report.

The RM50 million acquisition price implies a price-to-AUM of 5.7% times — more pricey than the 3.08% valuation in the Affin Hwang deal in 2022 — a price-to-book value (PBV) of two times and a price-earnings ratio of about 30 times.

Given Pheim’s “low overall cost”, the pricier valuation is not particularly concerning, says MBSB Research. “The RM50 million price point is of negligible impact on [Affin Bank’s] Common Equity Tier-1 ratio. We like the deal: Pheim’s award-winning management team is retained, and asset management is a scalable business which ties in well with the group’s wealth management offerings (and Sarawak’s sovereign wealth fund). Cross-selling opportunities are plentiful.”

Though small, Pheim, founded by Tan in 1993, is a profitable and award-winning firm that manages conventional and Islamic funds — sourced mainly from high-net-worth individuals — as well as unit trusts. The selling shareholders are Tan (45% stake), Multi-Purpose Capital Holdings Sdn Bhd (20%), Lyndisfarne Holdings Ltd (15%), Azmi Malek Merican (15%) and Japan’s Aizawa Securities Group Co Ltd (5%). As at June 30, its AUM was at RM875.74 million.

Market sources say Tan, 75, is expected to stay on as an adviser to the business for some 18 months after the sale, after which it remains to be seen whether he will choose to retire.

The Pheim group reported a profit after tax of RM1.58 million last year on revenue of RM7.9 million, and had RM25.61 million in net assets and RM21.6 million in fixed deposits, cash and bank balances. In 2023, its PAT and revenue were  higher at RM2.17 million and RM9.05 million respectively.  

The deal, subject to the approvals of Bank Negara Malaysia and the Securities Commission of Malaysia, is expected to be completed by 1Q2026.

Affin recently reported a flat 3QFY2025 net profit of RM144.99 million compared with RM145.82 million in the same period a year earlier, helped by a net write-back in provisions. This led to a 10.1% increase in 9MFY2025 earnings to RM412.56 million, which came in slightly ahead of analysts’ expectations, at 77% of a consensus full-year forecast.

Be that as it may, given the challenging operating environment, its management revised lower its FY2025 targets for the year, with analysts saying it now guides for profit before tax of RM880 million (from RM1.1 billion previously) and return on equity (ROE) of 4.8% (from 6%), among others.

Bloomberg data shows that of 10 analysts that track Affin Bank, four have a “buy” call while six are calling a “hold”, with the 12-month average target price at RM2.67. This suggests further upside from its closing of RM2.23 on Nov 28 which accords Affin Bank a market value of RM5.65 billion. The stock is down 19.1% year to date.

UOB Kay Hian Research revised its non-interest income and net credit cost assumptions for Affin Bank, resulting in FY2025 earnings being raised by 8.3%. In a Nov 21 report, it says: “[We] maintain our ‘hold’ with a higher target price of RM2.60 (0.55 times FY26F PBV, ROE: 5.3%) from RM2.55 as we raise our earnings to factor in Pheim’s contributions.” 

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