IN 2012, Chan Guan Seng was ousted at the annual general meeting (AGM) of Apex Equity Holdings Bhd — a stockbroking firm that he founded — as his sister-in-law Lim Siew Kim had voted against his re-election. The seasoned stockbroker, however, was reappointed two working days later after an emergency board meeting.

A lot has happened at Apex since. Both Guan Seng and Siew Kim have passed away, the emergence of a new substantial shareholder — ACE Group — was condemned by the Securities Commission Malaysia (SC), a failed merger between JF Apex Securities Bhd and Mercury Securities Sdn Bhd, and several rounds of boardroom reshuffles. Still, the drama at the company seems to be far from over.

The death of Guan Seng in 2018 created a leadership vacuum at Apex in the last 4½ years. A few months before his passing, in September 2017, he sold a block of shares to ACE Investment Bank Ltd, which subsequently emerged as a major shareholder of Apex with a 25% stake.

Mercury Securities came into the picture in December 2018 when it proposed a RM140 million merger with JF Apex. Under the proposal, Mercury Securities would emerge as a major shareholder of Apex with a 31% stake in the newly merged entity.

However, the proposed merger turned bizarre in February 2019 when the SC granted conditional approval. The regulator required ACE IB to sell down its shareholding in Apex to below 15% within a month of the merger completion date and dispose of its entire stake within six months of the merger completion date. In addition, ACE IB was to step down from the board of Apex Equity upon completion of the merger.

Although the SC did not provide a reason for setting the conditions, it is learnt that its reservations over ACE IB stemmed from previous breaches of securities regulations by its parent, ACE Holdings Bhd, which had led the SC to censure the latter and ban it from fundraising activities.

Between June and July 2019, ACE IB transferred its entire stake in Apex to its sister company ACE Credit (M) Sdn Bhd, which then pared down its shareholding to 14.98%.

After long drawn out courtroom and boardroom battles, Mercury Securities called off the merger in April last year. It is now looking at a potential initial public offering on Bursa Malaysia’s ACE Market instead.

Stay or exit?

Following the failed merger, the question is whether ACE is still required to exit Apex.

When contacted by The Edge, both the SC and ACE remained tight-lipped on the matter.

“The SC is not able to comment on developments in relation to Apex Equity as our review and assessment of the matter is ongoing,” says the regulator. ACE replies, “We are unable to comment on this as it is still an ongoing matter with the SC.”

Notably, ACE has been tightening its grip on Apex by gaining control of the latter’s boardroom.

On the other hand, four directors of Apex — namely, Leong Sek Hoe, Ng Kit Ching, Dr Yap Lang Ling and H’ng Boon Keng — were not re-elected at the AGM on June 20. Non-executive chair Chithra Ganesalingam withdrew her offer for re-election at the last minute and retired.

Subsequently, new faces have appeared on the board of Apex. At least three of seven directors are linked to ACE Holdings or its group of companies.

Newly appointed managing director Datuk Calvin Choong Chee Meng, who will helm Apex, is co-founder and executive director of the ACE Group. Apex deputy managing director Datuk Celine Leong Wai Leng is the former group director of finance treasury at the ACE Group.

Meanwhile, executive director Lim Kok Eng is currently the audit committee chairman of ACE IB and independent non-executive director of ACE Money Exchange Sdn Bhd.

The remaining four board members are independent non-executive chairman Datuk Ahmad Redza Abdullah and three independent non-executive directors Woon Wai En, Lee Siow Hong and Rozana Shamsuddin. It is worth noting that Ahmad Redza is managing director and CEO of Sarawak Cable Bhd, in which Woon was chief operating officer from 2017 until January this year.

Interestingly, both Wai Leng and Kok Eng had stints in several statutory bodies and front-line regulators.

Wai Leng served more than 22 years at the SC, having held various key positions, including as head of corporate surveillance and head of inspection on the Audit Oversight Board (AOB). Her last position before her retirement in 2020 was deputy director and head of investigation.

Kok Eng was with Bank Negara Malaysia’s special investigation unit, where he led the computer forensics team, before he became head of the exchange market data information services at Bursa Malaysia. He later joined the SC and was appointed head of the analytics department.

ACE insists that since Apex is a public-listed company, anyone can buy its shares.

“We were approached by the late Mr Chan Guan Seng to sell his stake in Apex Equity. Since the demise of Mr Chan, the company has not been performing at par with the industry. Apex is a good company with a solid foundation and good growth potential. It warrants a change from the top to bring new hopes for better future growth,” it tells The Edge.

“Considering that ACE Credit as a shareholder has invested a significant amount in the company, we felt that it is time we exercise our shareholder’s rights to refresh the board composition at the AGM.”

It highlights that the current board comprises experts and professionals such as accountants, lawyers and former regulators who have a fiduciary obligation to oversee the good governance of Apex and they are expected to conduct themselves in such a manner.

Notably, Apex changed its registered address from Menara Apex in Kajang to ACE Tower at KL Eco City last Tuesday.

On the same day, Apex proposed to establish an employees’ share scheme (ESS) of up to 15% of the company’s total share capital for its eligible directors and employees. The proposed ESS requires shareholders’ approval at a forthcoming extraordinary general meeting (EGM).

Apex has had a total issued share capital of 213.563 million shares since 2000. It currently has 10.923 million Treasury shares.

When eligible directors and employees exercise ESS, existing shareholders will face shareholding dilution. On top of that, a group of new shareholders would collectively hold a 15% stake.

Fragmented shareholdings

Currently, apart from ACE Credit, which has slightly less than 15% equity interest, Apex has three other substantial shareholders.

Kenanga Growth Fund, Kenanga Growth Opportunities Fund and Kenanga BondEXTRA Fund are among the top 30 shareholders of Apex. Collectively, the three Kenanga funds own a 17.3% stake in the company. It is believed that they bought the blocks of shares from Guan Seng’s heirs.

The late Siew Kim — daughter of the late patriarch of the Genting Group, Tan Sri Lim Goh Tong — who married Guan Seng’s late elder brother Dick Chan Teik Huat, owned at least a 32.28% stake in Apex.

In addition to her direct stake of 2.79% in Apex, it is estimated that Siew Kim had also indirectly controlled the lion’s share of the company via Fun Sheung Development Ltd (15.78%), Yenson Investments Ltd (5.18%), Pinerains Sdn Bhd (4.39%) and Cergas Megah Sdn Bhd (3.73%), as well as her late husband Teik Huat (0.41%).

Meanwhile, former investment banker Lim Beng Guan holds an 8.675% stake. Other prominent shareholders include Datuk Azizan Abd Rahman (1.36%) and Pacific & Orient Insurance Co Bhd (0.55%).

Azizan — husband of former SC chair Tan Sri Zarinah Anwar — was a non-executive director of Apex until he vacated the office in April 2020. Pacific & Orient Insurance is the insurance arm of Main Market-listed Pacific & Orient Bhd, which is controlled by low-profile businessman Chan Thye Seng.

Over the past 12 months, Apex’s share price had gained 21% to close at RM1.07 last Thursday, giving the company a market capitalisation of RM228.51 million. The counter is currently trading at a historical price-earnings ratio (PER) of 15 times and a price-to-book value (P/BV) of 0.68 times against its net assets per share of RM1.57.

Other than the fact that Apex is holding a valuable stockbroking licence, corporate observers point out that its major shareholders could be eyeing the group’s sizeable cash pile of RM169 million.

Apex recorded a net profit of RM21.5 million in the financial year ended Dec 31, 2021 (FY2021) — its best earnings performance since FY2014 and a year-on-year growth of 25% from RM17.2 million in FY2020.

When contacted, Kenanga Investment Bank Bhd, Siew Kim’s daughter Estelle Chan T’shiao Li, and Beng Guan declined to comment on matters related to Apex.

“Unfortunately, we won’t be able to participate in this article at the moment due to prior commitments and we won’t be able to make the submission deadline,” Kenanga IB replies to The Edge.

T’shiao Li says, “I actually don’t know anything about Apex at all. Sorry, I can’t help.”

Beng Guan says he is not able to comment, citing “sub judice” as a reason.

Who is the kingmaker?

Recall that Concrete Parade Sdn Bhd — 95% controlled by Beng Guan — sued Apex in February 2019 as it sought a declaration that the heads of agreement and business merger agreement signed between the stockbroking firm and Mercury Securities in 2018 were illegal, unlawful and void.

Beng Guan, co-founder of corporate finance firm ZJ Advisory Sdn Bhd, emerged as a substantial shareholder of Apex on July 1 with an 8.675% stake.

Previously, he held two blocks of shares in Apex. The first block was a 4.93% stake via Concrete Parade and the other was a 3.74% stake held through Joymap Bridge Sdn Bhd, a private vehicle in which he has 10% equity interest.

It is not known why Beng Guan consolidated his shareholding in Apex. Judging by his current shareholding, the corporate dealmaker could be a decisive figure should there be a proxy fight in the future.

Collectively, ACE and Kenanga have a 32.28% stake in Apex, while the late Siew Kim’s estate holds at least 32.28% equity interest in the company.

Based on voting patterns at shareholders’ meetings and the lawsuits over the years, Beng Guan was seen to have aligned with the late Siew Kim. Now that Siew Kim is no longer in the picture, will he switch sides?

On the other hand,  it is not known what Siew Kim’s heirs intend to do with their stake.  Their decision will be another determining factor in Apex’s shareholding structure.

Given the circumstances, the whole dynamic at Apex is bound to change again.