SINGAPORE (March 20): Malayan Banking Bhd., Southeast Asia’s top arranger of equity fundraising deals, is anticipating transactions in the region to rebound from a five-year low on the back of an improved economic outlook.
Share sales and rights offerings are likely to come from industries including power, infrastructure and consumer products, John Chong, chief executive officer of the Malaysian lender’s Maybank Kim Eng investment-banking unit, said in a phone interview from Kuala Lumpur on March 17.
Part of the activity will come from companies that had deferred deals last year, he said. Equity sales and rights offerings by Southeast Asian companies fell to $29 billion in 2016, 15 percent below the previous year and the lowest since 2011, according to data compiled by Bloomberg.
Deals slumped as a slowdown in China, weaker exports and a collapse in commodity prices hurt Southeast Asia’s major economies the past two years. “We are looking at a much improved market this year,” said Chong, whose team is presently involved in three initial public offerings in Malaysia, Thailand and Singapore that are seeking to raise a combined $1.2 billion. “The outlook is more positive and the momentum has picked up quite a bit.” The largest economies in the region including Indonesia, Singapore, Malaysia and Thailand are expected to grow faster this year than in 2016, according to Maybank economists Chua Hak Bin and Lee Ju Ye. That’s due in part to higher infrastructure spending and a “robust recovery” in exports, they wrote in a March 16 report.
The three IPOs that Maybank Asian Equity is currently a joint adviser on are: Kuala Lumpur-based Eco World International, which is seeking about $580 million, Viz Branz Pte, an instant-beverage maker that’s hoping to raise $160 million in Singapore, and Bangkok-based TPI Polene Power Pcl, which is striving for about $500 million, according to data provided by Maybank. Maybank, Malaysia’s largest lender, was the top-ranked arranger of Southeast Asian equity and equity-linked offers in 2016, with $1.1 billion of deals, data compiled by Bloomberg show.
The transactions boosted the firm’s ranking to first from eighth in 2015. While he was optimistic about dealflow, Chong struck two cautionary notes: Geopolitical issues, especially in Europe and the U.S., and volatile commodity prices could still upset the positive outlook for the year. “I won’t say I am bullish,” he said. “I am saying the market is improving definitely, but there are still uncertainties.” Maybank’s investment-banking team, which includes equity and debt capital markets as well as mergers and acquisitions, has a staff of about 200, Chong said. Maybank Kim Eng as a whole, which includes securities trading, has 2,800 people. The bank has no plans to cut nor increase the headcount, Chong said.
Maybank Equity shares rose 8.7 percent this year.