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Dah Sing shareholders undecided on prospects for banking spin-off

Some Dah Sing Financial Holdings shareholders are finding it tough to decide what to do with their holdings ahead of the spin-off of its banking unit, Dah Sing Banking Group.

They are weighing up whether to continue holding Dah Sing Financial shares or switch to the spin-off unit.

'I am still not sure what to do with the holdings, I haven't made up my mind yet, but it definitely makes no sense to me to hold the two at the same time,' one fund manager said.

The spin-off plan is expected to be approved at a Dah Sing Financial shareholders meeting today.

'There's no point voting down the proposal ... you can just sell the shares if you don't like the proposal,' the fund manager said.

According to market sources, the roadshow for Dah Sing Banking Group will start on Monday and the listing of the shares is tentatively scheduled for June 30.

Whether to hold or sell Dah Sing Financial would come down to a comparison of its potential earnings growth and that of its banking unit, another fund manager said.

After the spin-off, Dah Sing Financial will become a holding company of the banking unit and run the insurance business.

'In comparison, I will expect Dah Sing Financial to see steady cash inflow largely from dividend payouts from the banking unit while the spin-off unit will have better growth potential,' the fund manager said.

The market has been speculating that the banking unit will acquire other banks such as Wing Lung Bank or unlisted Shanghai Commercial Bank, judging by the fact Dah Sing Financial obtained a waiver from the stock exchange allowing it to offer only 20 per cent of Dah Sing Banking Group's enlarged issued share capital to investors, compared with the mandatory 25 per cent.

'Why not 25 per cent? [It's] because it can use up the remaining 5 per cent to acquire the shares. The new acquisition is almost certain to be partly cash and partly scrip,' the fund manager said.

But some say it is worth hanging on to Dah Sing Financial shares.

Some said the spin-off would give Dah Sing Financial a better focus on its insurance company, which posted growth of 100 per cent last year.

'The holding company is changing its nature from a banking unit to an insurance unit - meaning the decision of hanging on with Dah Sing Financial would be your preference of a bank or an insurer or both,' another fund manager said. In addition, shareholders of the parent firm would receive sweeteners, the fund manager said.

Dah Sing Financial said it would pay its existing shareholders a special dividend of 80 cents per share and set aside 15 per cent of the global offering for its shareholders who will be able to apply for one share in the new unit for every five they hold in Dah Sing Financial.

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