Malaysian investment banks have potential for growth

Reading Time: 3 minutes

The development of capital markets in Malaysia has brought about the expansion of services of Malaysia’s investment banks across equity capital markets, debt capital markets, mergers & acquisitions (M&A), and syndicated loans. During 2011, Malaysian issuers placed Islamic bonds (sukuks) on international markets  with a total proceeds value of $25.378 billion. Malaysian investment banks did play an important book runner role for those transactions underwriting as much as 90.46 per cent of the total proceeds value. Out of the 100 per cent of total proceeds raised, 9.54 per cent therefore were not underwritten by Malaysian investment banks but instead by global investment houses such as Citibank, HSBC, or Standard Chartered, which run operations at global scale.

ztable
Source: Dealogic

Sukuks were not the only instruments through which corporations, government entities, or financial institutions in Malaysia raised money from capital markets during 2011. The total proceeds related to conventional bonds were $9.979 billion, while Malaysian IPOs accounted for $2.296 billion.

In both cases, Malaysian investment banks were also closely involved in those transactions and had active book runner roles. 66.28 per cent of the total proceed volume of conventional bonds and 71.85 per cent of IPO deals value were placed through these Malaysian institutions.

On the other hand, 33.72 per cent of the conventional bonds and 28.15 per cent of IPOs, respectively, were not covered by Malaysian book runners, which constitutes opportunities for Malaysian investment banks to expand their market locally.

Graph 1. Source: Dealogic. Click to enlarge.

As shown in Graph 1, similar opportunities can also be identified on the mergers and acquisitions (M&A) and syndicated loan market. The deal value of Malaysian M&A (defined by the company target being Malaysian) stood at $25.736 billion in 2011, while the total value of syndicated loans reached $14.444 billion. Malaysian banks acting as advisors for M&A transactions covered 81.86 per cent of the total M&A deal value and had book runner roles for 42.06 per cent of the total syndicated loans. See Graph 2.

This means that a market share of as much as 18.14 per cent for M&A activities and 57.94 per cent for syndicated loans were covered by non-Malaysian financial institutions during 2011.

The expertise of Malaysian investments banks is not only recognised across Malaysian markets, but also globally. The proceeds raised through sukuks globally during 2011 was $32.613 billion, having Malaysian IBs underwriting as much as 68.4 per cent of the total amount. See Graph 3.

Graph 2. Source: Dealogic. Click to enlarge.

The scenario considering only Asia-Pacific (APAC) issuers even shows more emphatically the prominence of Malaysian investment banks. Out of the total of  $26.416 billion proceeds realised from sukuks, in 84,6 per cent of the cases Malaysian investment banks had book runner role.  See Graph 4.

Whether the issuers are international firms, from APAC, or Malaysian, are raising money through debt capital markets or IPOs, or are involved in M&A or syndicated loan transactions, Malaysian investment banks constitute a wise alternative considering how well they have managed to position themselves in the global arena of investment banking.

Graph 3. Source: Dealogic. Click to enlarge.
Graph 4. Source: Dealogic. Click to enlarge.

 

 

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Reading Time: 3 minutes

The development of capital markets in Malaysia has brought about the expansion of services of Malaysia’s investment banks across equity capital markets, debt capital markets, mergers & acquisitions (M&A), and syndicated loans. During 2011, Malaysian issuers placed Islamic bonds (sukuks) on international markets  with a total proceeds value of $25.378 billion. Malaysian investment banks did play an important book runner role for those transactions underwriting as much as 90.46 per cent of the total proceeds value. Out of the 100 per cent of total proceeds raised, 9.54 per cent therefore were not underwritten by Malaysian investment banks but instead by global investment houses such as Citibank, HSBC, or Standard Chartered, which run operations at global scale.

Reading Time: 3 minutes

The development of capital markets in Malaysia has brought about the expansion of services of Malaysia’s investment banks across equity capital markets, debt capital markets, mergers & acquisitions (M&A), and syndicated loans. During 2011, Malaysian issuers placed Islamic bonds (sukuks) on international markets  with a total proceeds value of $25.378 billion. Malaysian investment banks did play an important book runner role for those transactions underwriting as much as 90.46 per cent of the total proceeds value. Out of the 100 per cent of total proceeds raised, 9.54 per cent therefore were not underwritten by Malaysian investment banks but instead by global investment houses such as Citibank, HSBC, or Standard Chartered, which run operations at global scale.

ztable
Source: Dealogic

Sukuks were not the only instruments through which corporations, government entities, or financial institutions in Malaysia raised money from capital markets during 2011. The total proceeds related to conventional bonds were $9.979 billion, while Malaysian IPOs accounted for $2.296 billion.

In both cases, Malaysian investment banks were also closely involved in those transactions and had active book runner roles. 66.28 per cent of the total proceed volume of conventional bonds and 71.85 per cent of IPO deals value were placed through these Malaysian institutions.

On the other hand, 33.72 per cent of the conventional bonds and 28.15 per cent of IPOs, respectively, were not covered by Malaysian book runners, which constitutes opportunities for Malaysian investment banks to expand their market locally.

Graph 1. Source: Dealogic. Click to enlarge.

As shown in Graph 1, similar opportunities can also be identified on the mergers and acquisitions (M&A) and syndicated loan market. The deal value of Malaysian M&A (defined by the company target being Malaysian) stood at $25.736 billion in 2011, while the total value of syndicated loans reached $14.444 billion. Malaysian banks acting as advisors for M&A transactions covered 81.86 per cent of the total M&A deal value and had book runner roles for 42.06 per cent of the total syndicated loans. See Graph 2.

This means that a market share of as much as 18.14 per cent for M&A activities and 57.94 per cent for syndicated loans were covered by non-Malaysian financial institutions during 2011.

The expertise of Malaysian investments banks is not only recognised across Malaysian markets, but also globally. The proceeds raised through sukuks globally during 2011 was $32.613 billion, having Malaysian IBs underwriting as much as 68.4 per cent of the total amount. See Graph 3.

Graph 2. Source: Dealogic. Click to enlarge.

The scenario considering only Asia-Pacific (APAC) issuers even shows more emphatically the prominence of Malaysian investment banks. Out of the total of  $26.416 billion proceeds realised from sukuks, in 84,6 per cent of the cases Malaysian investment banks had book runner role.  See Graph 4.

Whether the issuers are international firms, from APAC, or Malaysian, are raising money through debt capital markets or IPOs, or are involved in M&A or syndicated loan transactions, Malaysian investment banks constitute a wise alternative considering how well they have managed to position themselves in the global arena of investment banking.

Graph 3. Source: Dealogic. Click to enlarge.
Graph 4. Source: Dealogic. Click to enlarge.

 

 

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