Highlight DBS, CIMB elbow out global rivals in share sales

by **Cals** Mon 09 Mar 2015, 23:57

Highlight
DBS, CIMB elbow out global rivals in share sales

By Bloomberg / Bloomberg | March 9, 2015 : 11:15 AM MYT

(Mar 9): Southeast Asian banks are overtaking some of the biggest international securities firms in managing regional stock sales, capitalizing on corporate banking relationships and bigger balance sheets to win deals.

[size=14]Malayan Banking Bhd. ([You must be registered and logged in to see this image.] Financial Dashboard), DBS Group Holdings Ltd. ([You must be registered and logged in to see this image.] Financial Dashboard), and CIMB Group Holdings Bhd. ([You must be registered and logged in to see this image.] Financial Dashboard) beat all rivals except Credit Suisse Group AG for the biggest shares of Southeast Asia’s $24.1 billion of equity and equity-linked deals last year, data compiled by Bloomberg show.

It was the first time in the history of the figures dating back to 2007 that three regional banks featured among the top five arrangers, thanks partly to deals linked to Thailand’s richest man and the son of a former Malaysian prime minister. An increase in assets has boosted their capacity to attract deals, according to Sanford C. Bernstein & Co.’s Kevin Kwek.

“In the past, they were in no position to compete for capital markets, while international banks swooped in on these areas, picking on the largest customers,” Kwek said. “They now have the capabilities to compete, and with their enlarged balance sheets, have been able to leverage long-lasting relationships to pitch for the business.”

Maybank, DBS and CIMB have boosted combined assets by 96 percent since 2009, data compiled by Bloomberg show, through acquisitions and increased deposits.

Thai Billionaire

The Southeast Asian banks were competing for a smaller pool of business, with the volume of equity and equity-linked offerings shrinking 34 percent last year from $36.6 billion in 2013, data compiled by Bloomberg show. The market was hurt by political ructions in Thailand and Indonesia, and a move by investors to seek higher yields from dollar-denominated assets.

Maybank ranked second among arrangers after Credit Suisse, followed by DBS, CIMB and JPMorgan Chase & Co., according to the data. The three Southeast Asian banks were involved in 22 percent of 2014’s total deal flow.

DBS advised on an IPO of more than $800 million in May by billionaire Charoen Sirivadhanabhakdi’s Thai Hotel Investment Freehold & Leasehold Property Fund. The bank, Southeast Asia’s largest, was among advisers to Charoen’s TCC Assets Ltd. on its S$8.1 billion ($5.9 billion) purchase of shares it didn’t already own in Fraser and Neave Ltd. ([You must be registered and logged in to see this image.] Financial Dashboard), which was completed in 2013, data compiled by Bloomberg show.

“We follow our clients in their growth journey and are able to support them at key points” through debt and equity transactions, Eng-Kwok Seat Moey, head of capital markets at DBS, said in a March 4 interview.

Malaysian Deals

The largest deals for Maybank and CIMB last year were share sales in SapuraKencana Petroleum Bhd. ([You must be registered and logged in to see this image.]Financial Dashboard), Malaysia’s biggest listed oil and gas services company by market value. The two banks helped finance the 2012 merger between SapuraCrest Petroleum and Kencana Petroleum, people familiar with the matter said at the time.

CIMB handled a 818.3 million-ringgit ($222 million) sale of SapuraKencana equity in February 2014 by a company linked to Mokhzani Mahathir, the second son of former Prime Minister Mahathir Mohammad. Maybank managed a subsequent sale of SapuraKencana shares in April by Seadrill Ltd., an offshore driller controlled by billionaire John Fredriksen.

Credit Suisse owed its number one ranking and 7.9 percent market share last year in part to business generated by its private wealth network, Manish Chhalani, the firm’s Singapore- based head of Southeast Asian equity capital markets, said in a March 3 phone interview.

UBS Group AG, Switzerland’s largest bank, dropped to seventh among arrangers of Southeast Asian share sales from the top spot in 2013, according to the data.

Tougher Rules

Compared with Southeast Asian banks, UBS has a “different business model” that offers access to global markets and research, Sam Kendall, the firm’s Hong Kong-based global head of equity capital markets, said March 3 by phone. So far this year, UBS led all arrangers of Southeast Asian share sales with five deals worth $1 billion.

Tougher rules imposed on financial firms by regulators since the global financial crisis have put global banks under pressure to cut costs and headcount to bolster profits.

“Some of the multinational banks are having problems at home, with tighter regulation and higher capital requirements, making it very difficult for them to put more resources in Asia,” said Gerald Ambrose, who helps manage $965 million at Aberdeen Asset Management’s Malaysian unit in Kuala Lumpur.

Job Cuts

Asian banks aren’t immune, with CIMB planning to cut about 50 mostly equities-related jobs in Asia to trim costs, people familiar with the matter said last month. The third-largest Malaysian bank by market value said Feb. 6 it plans to lower investment-banking costs by about 30 percent this year.

“We do not anticipate the job cuts to have any major impact on our businesses,” Tengku Zafrul Tengku Abdul Aziz, CIMB’s chief executive officer, said in an e-mail last week. “The job cuts reflect our effort to de-layer our operations and businesses. We will continue to grow our market share in the investment-banking space.”

As of early March, CIMB is ranked fifth for Southeast Asian share sales, data compiled by Bloomberg show. The firm and second-ranked Bangkok Bank Pcl are the regional banks in the top five for deals, with involvement in transactions accounting for 28 percent of the $4.3 billion of offerings so far in 2015.

John Chong, Maybank’s investment-banking chief, expects “robust” deal flow this year amid economic growth in the region. Economies in the Association of Southeast Asian Nations may grow 5 percent this year after 4.5 percent growth last year, World Bank projections in October showed.

“We already have a strong pipeline of deals for Malaysia and Thailand and have a number of very strong prospects for all the other markets,” Chong said in an e-mail. “We are expecting another good year for 2015.”
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