AFTER becoming the top global trader in Islamic bonds, Maybank Kim Eng now wants to be the region's top investment bank.
"I want to guide the bank to be the leading investment bank in Asean," said Maybank Kim Eng's chief executive John Chong in a recent interview.
And the investment bank's top executive aims to achieve it by helping Asean clients access capital markets as they expand in the region.
Mr Chong said the need for capital is tremendous within Asean, and for businesses between Asean and the rest of the region and between Asean and China.
Maybank Kim Eng has grown to become a significant player in Asean investment banking, especially in the last few years when many global players exited the Asean market following the Global Financial Crisis.
In 2017, Maybank Kim Eng, the investment banking arm of Maybank, Malaysia's biggest banking group, topped Bloomberg's league for global sukuk (Islamic bond) and Asean loan syndication. It was ranked second in Asean local currency bonds.
In its quest for the leading position in the region, the Malaysian investment bank will be competing head-on with bigger players that include global banks and Singapore's big three - DBS, UOB and OCBC - which have similar ambitions and which all say they have the network to capture trade flows and are able to support infrastructure activity in the region.
Mr Chong is not deterred by the competition, arguing that Maybank Kim Eng is in a sweet spot to provide both debt and equity advice for the region. The investment bank is the only bank in the world which has a presence in all 10 Asean countries.
Maybank Kim Eng's core markets are the Asean 6 - Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam - and the "hot spots" it is looking at are the Philippines, Vietnam and Indonesia, according to Mr Chong.
He said these three markets have big capital expenditure needs. The Philippines, Vietnam and Indonesia are expected to grow at more than 7 per cent, 6.5 per cent and 5.3 per cent respectively this year.
Besides being the major player in the sukuk market, Maybank Kim Eng also provides project financing, leveraged financing and loan syndication in its core markets.
Malaysia is the world's largest sukuk market and, in 2017, issuances by its corporates, financial institutions and the sovereign represented 34 per cent of total global issuances, according to Moody's Investors Service. Global sukuk issuance grew 17 per cent in 2017, amounting to around US$100 billion.
On the equity side, Maybank Kim Eng offers merger and acquisition advice, IPOs and retail and institutional securities broking and research.
Investment banking contributes 7-8 per cent to the group's revenue and profit.
Maybank bought Singapore's Kim Eng Securities in 2011, giving it the investment banking framework and expertise to expand in the region. Today the investment bank has about 3,000 people, two thirds of whom are outside Malaysia. Its Singapore office has some 400 staff.
Maybank Kim Eng has 800 employees in Thailand, where it is also the country's largest stockbroker, with 47 branches. It has been Thailand's top stockbroking firm for the past 16 years.
"We have the largest equity franchise in South-east Asia in terms of volumes," said Rajiv Vijendran, Maybank Kim Eng regional head, investment banking advisory.
Last year, Maybank Kim Eng advised TPI Polene Power's 17.5 billion baht (S$732 million) IPO, one of the largest listings in Thailand.
Mr Vijendran said the group is seeing a lot of Asean-based companies looking to grow outside their domestic market.
In Singapore, Maybank Kim Eng is helping a local company grow its education business in Vietnam. It is also working on a few IPOs for the Singapore market, he added.
So far this year, it has helped Oxley Holdings' placement with a value of US$61 million and Sasseur Reit's IPO valued at S$309 million.
On the debt side, the investment bank is helping companies from Malaysia, Singapore and Indonesia raise money as they invest in Indochina, said Caroline Teoh, Maybank Investment Bank regional head, investment banking and advisory.
Singapore companies investing in Indochina are mainly from the real estate, infrastructure and energy sectors, said Ms Teoh. She said Singapore, as a financial hub, provides a lot of capital for the region. For instance, many Indonesian companies borrow US dollars from Singapore for their domestic expansion.
"We see a lot of Indonesian clients tapping US dollars in Singapore. It can be bonds and loans, whatever that gives them the best pricing," Ms Teoh said, adding many would like to lock in their funding now before interest rates rise further.
Maybank Kim Eng has raised a total of US$8.95 billion for its Indonesia clients since 2014 via cross-border transactions in the form of ringgit sukuk, USD sukuk, USD and euro syndicated loans.
Ms Teoh said Chinese companies are keen on the insurance, infrastructure and manufacturing sectors - and they are coming to Asean to buy and invest under China's Belt and Road Initiative (BRI).
Between 2006 and 2016, China's outward investment in Asean jumped from US$1.8 billion to US$71.6 billion, making it the third largest foreign direct investor in Asean. Trade between Asean and China also increased by 16 per cent from 2016 to 2017.
Asean accounts for the largest share of Chinese M&A investment, making up about 30 per cent of total M&A investment in BRI countries, for the 2005-2016 period. Last year, China boosted its commitment to the BRI by pledging an additional US$124 billion.
Said Mr Chong: "We're intermediaries, we match people with capital. We want to capture the flows into Asean and also Asean flows to China."