PETALING JAYA: CIMB Investment Bank Bhd is embarking on a multi-faceted strategy as it looks to secure more deals in Asean at a time when the region’s economy is hammered by Covid-19.
It is currently the top investment bank in the debt capital market segment, maintaining its leadership in local currency bonds across Asean. It hopes to maintain the top spot for this year.
CIMB Investment Bank chief executive officer Jefferi Hashim told StarBiz that given the inter-connectivity of the investment banking business as well as its regional franchise, the strategy for the bank has to be multi-faceted.
The underlying theme is investment in human capital, infrastructure and the requisite tools to allow the team to deliver differentiated investment banking services to its clients across Asean.
“Our investments in the regional franchise will allow the bank to continue to deliver and apply a wealth of institutional knowledge and experience acquired over many years for the benefit of our clients across Malaysia, Indonesia, Singapore and Thailand.
“Our established Asean footprint and consistent success over the years has allowed us to continue to invest in our franchise, cementing our leading position in the region.
“The strategy has worked for CIMB as we have rolled out successful initial public offerings (IPOs) in Indonesia, Singapore, Thailand, the Philippines and Malaysia in the last two years.
Deloitte Malaysia financial services industry investment management leader Khoo Siew Kiat said there would continue to be active M&As and IPO activities albeit at lower numbers (in volume) as compared to the pre-pandemic years.
Jefferi added that CIMB has garnered global recognition for bringing many of its regional clients to the international debt capital markets, being consistently the sole Malaysian-domiciled debt franchise to be mandated for numerous global transactions.
“To date, our franchise completed seven global deals worth about US$7.5bil (RM31.4bil) in aggregate – an area usually dominated by global banks.
We have also demonstrated leadership in the environmental, social and governance (ESG) space – being the largest Asean-based arranger for ESG bonds/sukuk in the markets we operate since 2015,” he noted.
Among the IPO deals handled by the bank outside of Malaysia were those in Thailand (for companies like Ngern Tid Lor and Central Retail Corp plc), Singapore (for Credit Bureau Asia and Elite Commercial REIT), Indonesia (Widodo Makmur Unggas and PT Selaras Citra Nusantara Perkasa Tbk) and the Philippines (DDPM REIT).
On the home turf, CIMB has raised RM1.0bil for Inari Amertron Bhd this year via a primary placement (the largest primary placement in four years in Malaysia) and completed a secondary placement of MR DIY Group shares raised RM846mil (largest block trade in South-East Asia).
Other notable deals included Khazanah’s block trade of Telekom Malaysia (RM312mil).
CIMB is also the top three equity capital market banks in the country (excluding self-led deals).
The bank is top three in the equity capital market and in the merger and acquisitions (M&As) space in the country.
Commenting on M&As, Jefferi said: “We are also seeing interest from strong Asian companies looking to invest in Malaysia as they look to diversify their geographic exposure into relatively stable economies and well-regarded labour markets.
“The key sectors in trend for now are tech and logistics. Consumer staples, healthcare and education continue to be favourites due to their resilience.
“The pandemic has accelerated disruption, forcing businesses to accelerate their plans to future proof business, which in certain cases, is likely to drive M&A,” he said.
Meanwhile, Deloitte Malaysia financial services industry investment management leader Khoo Siew Kiat said there would continue to be active M&As and IPO activities albeit at lower numbers (in volume) as compared to the pre-pandemic years.
He said equity brokering activities would also be less active in comparison to the second half of 2020.
On the growth drivers for the investment banking business, he said it would be the stock broking, investment management, M&As, and IPOs.
On the outlook for the investment banking business in the country, CIMB’s Jefferi said investment banking activities picked up considerably in 2021 compared with previous years despite the growing number of Covid-19 cases, political uncertainties and other external headwinds.
Despite the rising Covid-19 cases in Malaysia, he said the local capital markets remained constructive, facilitating capital market activity.
In addition, he said market participants are taking comfort that the National Immunisation Plan has gained considerable momentum, and are positioning themselves to benefit from the recovery.
For the corporate bond/sukuk segment, year-to-date August 2021 issuance volume stood at about RM64bil as issuers took advantage of the low interest rate environment to refinance their borrowings as well as for future capital or operational expenditures.
“We expect a total of about RM95bil of corporate bonds/sukuk issuances for 2021, largely similar to the RM96bil seen in 2020, on the back of government guaranteed issuances, bank capital requirements, infrastructure projects, as well as corporate financing requirements,” he said.
For the equity capital markets, a total of RM5.3bil was raised from equity deals in the country in the first half of the year.
Of the amount, RM396mil was raised from IPOs, whereas proceeds raised from follow-on offerings made up the bulk of the volume which totalled RM4.9bil (RM4.3bil in new issuances, and RM629mil in secondary block trades and rights offerings).