MAYBANK Investment Bank Bhd (Maybank IB) plans to use the acquisition of
Singapore’s banking franchise, Kim Eng Holdings, as a springboard to
become a regional financial powerhouse.
“Through the recent acquisition of Kim Eng,
our regional footprint has grown across 11 countries and
we will continue to expand our regional product offerings in order to
become a truly regional organisation,” chief executive officer Tengku
Datuk Zafrul Tengku Abdul Aziz told Business Times recently.
The company now has operations in Malaysia, Singapore, Hong Kong,
Thailand, Indonesia, Philippines, India, Vietnam, Saudi Arabia as well
as in London and New York.
Maybank IB is currently focusing on establishing and expanding its line of business – investment banking and advisory, retail
equities, institutional equities, derivatives and asset management – in
its home markets, which are Malaysia, Singapore, Thailand and Indonesia.
“Our next step will be to establish and grow the businesses in markets
such as the Philippines, Hong Kong, Vietnam, China and India,” he said.
Maybank IB has a presence in the Middle East via its investment in Anfaal Capital, an Islamic investment bank.
“We are continuing to invest in this region in order to tap deal flows
from the Middle East, as well as to further deepen our expertise in
Islamic finance,” Zafrul said.
Asked if Maybank IB is eyeing any acquisitions this year, he said that
the investment bank’s default position for expansion is by organic
growth.
"However, we are always open to the prospect of inorganic growth and are
constantly on the lookout for business opportunities, especially if the
valuation is justifiable," said Zafrul.
He added that at this juncture the company is focused on its integration exercise with Kim Eng.
The acquisition of Kim Eng has paid dividends, barely two months after Maybank IB's buy.
For the financial year ending June 30 2011,
Kim Eng contributed a pre-tax profit of RM29.9 million on the back of RM166.8 million revenue.
Zafrul reiterated that Maybank IB's biggest challenge this year is the
eurozone sovereign debt crisis and the prospect of a global financial
crisis.
He pointed that
within the markets where Maybank IB-Kim Eng has a research presence, there are earnings downside risks.
Waning investor confidence will also affect overall performance and
growth rates and volatility is expected to persist amid uncertainties,
he explained.
Nonetheless, Maybank IB expects gross domestic product (GDP) growth to
be steady and positive for the next five years across all countries with
gradual market liberalisation.
Across its key markets of Malaysia, Singapore and Indonesia, average
GDP growth forecasts are between 4.8 per cent to 6.3 per cent.
"However, despite the gloomy economic outlook, we still see
opportunities because of the immediate synergies from the merger with
Kim Eng.
"With our combined strength, Maybank-Kim Eng will have larger
underwriting capabilities which will allow the combined entities to
market for more and bigger primary deals. Capital markets will be
growing at a slower rate but our deal pipelines are still robust,"
Zafrul explained.
In Malaysia, corporate finance and bond markets are expected to benefit
from the government's implementation of the Economic Transformation
Programme and growth in initial public offerings (IPOs) and advisory
transactions are also expected to be robust in Singapore, he added.
In terms of new markets to be tapped from its current platform within
the Maybank group, Maybank IB is in the midst of setting up its
derivatives business and opportunities abound, especially given
Maybank's strong distribution network and existing client base.
"In this respect, we would be helping our clients to take advantage of
either bullish or bearish market conditions through derivatives and
structured products.
"We will also be rolling out products in countries such as Singapore and Thailand," he said.
In order to have a competitive edge, Zafrul said the
company must differentiate itself from the rest and let its products
speak for themselves.
"In creating innovative products, we offer our clients solutions which
will contain high-value propositions. Apart from that, strategic
competitiveness through innovative structures, pricing and
configurations will help to add depth to products.
"A very good example of an area where we have deep
expertise in is Islamic finance - especially in the area of sukuk, where
we are continuing to deepen our expertise and innovate to stay ahead of
the market," Zafrul said.
