KUALA LUMPUR - MALAYSIA's state-run pension fund sold 25 per cent of its stake in the country's fourth largest bank, RHB Capital, to Abu Dhabi Commercial Bank (ADCB), a statement said on Thursday.

The deal between the Employees Provident Fund (EPF) and ADCB, a Middle Eastern concern, is valued at RM$3.876 billion (S$1.66 billion), at RM$7.20 per share, it said.

The EPF is the single largest shareholder in RHB Capital with an 82 per cent stake. Under a central bank ruling, it needs to reduce its holding to 35 per cent by June this year.

Based on the purchase price, the deal is the 'largest investment to date of a Middle East investor into the Malaysian financial sector', the EPF said.

Upon divesting its stake to ADCB, the EPF will cut its shareholdings in RHB Capital to 57 per cent from 82 per cent.

The EPF said the landmark deal will drive RHB Capital to become one of the top three banks in the Southeast Asian region by 2020.

'RHB Cap and ADCB will now be uniquely positioned to leverage on growing business flows ... and strengthen both banks' regional position in the global Islamic Banking market', EPF chief executive officer Azlan Zainol said in the statement.

In March last year, EPF beat two rivals, including Kuwait Finance House, to gain control of RHB Capital by acquiring its parent Rashid Hussain Bhd.

Azlan, who is also a director at RHB Capital, said the banking group was planning to double its profit and market capitalisation in three years.

EPF chairman Samsudin Osman said EPF intends to further reduce its holding in RHB Capital, state Bernama news agency reported.

'We hope to bring in more investors and parties, which could contribute positively to the growth of RHB Capital. The EPF however, will remain the single largest shareholder in RHB Capital,' he said, according to Bernama.

EPF has requested approval from the central bank to keep 40 per cent of RHB Capital instead of 35 per cent.

With the sale, the ADCB is now the second largest shareholder of RHB Capital. -- AFP