As a conventional investment bank, Maybank Investment Bank has made great strides in the Islamic finance space. Ranked third in Dealogic’s league table for global Sukuk arranging in the last 12 months, the bank has also become more active in the investment banking scene in its Malaysian home market; traditionally dominated by its main competitor, CIMB Investment Bank.
With its business also now bolstered by the Maybank group’s acquisition of Singapore-based Kim Eng Holdings, a stock broking company with a strong ASEAN presence, Maybank Investment Bank is set to accelerate its activities across the region; with plenty of room for it to grow in the market for Islamic deals.
Islamic first
“We’re very positive on the pipeline of Islamic deals,” said Zafrul Aziz, CEO of Maybank Investment Bank, global wholesale banking, in an interview with Islamic Finance news.
“The Malaysian market started with a bang this year, starting with Projek Lebuhraya Usahasama (PLUS)’s RM30.6 billion (US$9.57 billion) Sukuk. That created quite a big momentum and that’s being carried forward by the government’s economic transformation program (ETP) projects. We’re seeing that kind of dealflow coming in. Not many have been announced, but for the next couple of months and in the next quarter, we’ll see a lot more of these ETP deals coming through,” added Wong Kuok Kwan, a director and its head of debt capital markets.
Public sector deals are also expected to contribute a major part of the bank’s projected RM90 billion (US$28.13 billion) deal pipeline this year, further driving the bank’s Islamic transactions for 2012. “The government will make up a fair share of transactions this year; and we want to be involved in as many of those as we can,” said Wong.
He also noted that Malaysia’s corporate are now taking advantage of the current flat yield curves to refinance existing debt or to raise capital.
“At the rate we’re going, it will probably be a little higher than that [RM90 billion]; and the majority of it will be Sukuk. For Maybank, it’s always Islamic first,” said Wong of the bank’s deal pipeline.
Maybank Investment Bank, whose portfolio of deals comprises between 70-74% Islamic transactions, is also looking to play a role in the further development of Islamic financing structures, having recently completed arranging the world’s first perpetual Sukuk, issued by Malaysian Airline System. Wong noted that much of the developmental work for the transaction was done with Maybank Islamic, paving the way for further product innovation.
“Gone are the days where you look at just Murabahah or Bai Bithaman Ajil; we’re now in the next stage of development,” he said, adding that this product innovation will drive many local corporate issuers towards the Shariah compliant space, especially in areas such as project financing.
Spreading its wings
Maybank Investment Bank is also increasingly looking offshore; boosted by its acquisition of Kim Eng: which has a presence in Singapore, Thailand, Indonesia and the Philippines, as well as the major financial centers of Hong Kong, London and New York.
“It’s getting very competitive. If you do not have a presence in the region, you cannot call yourself a global arranger. We are now present in 11 countries, employing 5,000 people under the Maybank-Kim Eng group. Our debt capital markets team is now looking at establishing dominant presence in Indonesia; while also leveraging the strong position of Maybank’s commercial banking business in Singapore,” said Zafrul.
Zafrul, who joined Maybank Investment Bank in 2010 following a lackluster period in the bank’s business, credits the resurgence in the bank’s activities to the “new house of Maybank”, which now sees the investment bank working closely with the corporate banking, treasury and transaction banking teams. In addition to the support of its board of directors in approving the Kim Eng deal, he said that the investment bank’s growing workforce also plays a role in keeping the bank busy.
Cautious optimism
Nonetheless, the Malaysian market will continue to take up the lion’s share of the bank’s business, particularly as Sukuk issuances from the country continue to dominate the global market; coupled with the fact that Sukuk markets elsewhere remain constrained by regulatory limitations.
Within the region, the bank is also bullish on its prospects for Indonesia. In addition to leveraging its presence via Kim Eng, Maybank Investment Bank also sees opportunities from its affiliation to Bank Internasional Indonesia; Maybank’s Indonesian arm, and Bank Maybank Syariah Indonesia, its Indonesian Islamic arm.
“In terms of DCM, we have made inroads. We also see Indonesia as a fertile place for loan syndication,” said Wong, while Zafrul added that Maybank Investment Bank’s recent move to increase its interest in Saudi Arabia’s Anfaal Capital to 36% will also create opportunities for the bank, including in the Islamic space.
“We’re looking forward to more opportunities for cross-border transactions; in ASEAN, greater China and the Middle East,” said Wong, who added however that the bank must also remain cautious in some of its new markets. “Deal opportunities are plentiful, but we need to pick and choose,” he said. — EB