International investment banks are devoting more time, money and staff
to South-East Asia than ever before, attracted to the region by a recent spate
of fundraisings and the promise of growth in countries like Malaysia, Indonesia
and the Philippines.
The latest hires in South-East
Asia come at a time when firms are also laying off dealmakers across Asia in
equities and other capacities. At the beginning of the month, for instance,
Deutsche Bank fired about a third of its Asian equity derivatives staff and
Nomura announced a major reduction to its equity franchise in Asia and abroad.
The conflicting trends illustrate
how bank executives are realigning their talent pools in anticipation that
China will no longer dominate dealmaking.
The China equities narrative that
dominated boardrooms since the Asian financial crisis has begun to lose its
way, while certain South-East Asian growth stories have become more compelling.
“Investors now want to know more
and more about South-East Asia,” said Philip Lee, investment banking CEO for
the region at JP Morgan. “There is a comfort level in the social and political
stability of the South-East Asian countries which has attracted investors to
put more focus on this region.”
The several successful and large
transactions in equity and debt further support its case.
Equity issuance in Malaysia
year-to-date is about twice what it was all of last year, including a recent
trade from IGB REIT, whose M$838m (US$269m) IPO this month was more than 30
times covered. Indonesia’s rating upgrade took it to investment grade status
early this year. And the Philippines has bolstered its appeal as it pursues an
infrastructure build-out.
More money, more people
To meet the demand, global banks
have made several hires, appointments and promotions recently in the region.
“South-East Asia has had a very
interesting year. The region has come into its own,” said Sandeep Pahwa, head
of investment banking, South-East Asia, at Barclays. “A lot of firms are
realising the region is important and that they need to put more resources and
talent and extend more balance sheet there at a time when the business might be
slow elsewhere.”
A few recent high-profile moves
have underscored SE Asia’s importance. In July, Goldman Sachs announced that it
would transfer Steve Barg, co-head of ECM for Asia ex-Japan, to Singapore from
Hong Kong to become co-head of investment banking for South-East Asia. In the
same month, Citigroup hired Willard McLane from Morgan Stanley to be head of
corporate and investment banking ASEAN and head of FIG corporate and investment
banking. McLane, like Barg, will relocate to Singapore from Hong Kong.
Other firms have made changes to
their regional teams. Last week Standard Chartered revealed it hired Patrick
Lee as head of origination and client coverage, and co-head of wholesale
banking, Singapore. He reports to Ray Ferguson, CEO for Singapore, and Anand
Kumar, regional head of origination and client coverage for South-East Asia.
Lee was previously at Nomura for four years, where he was head of South-East
Asia investment banking.
Musical chairs
Credit Suisse named Chiqui Huang
and Johnny Escaler co-heads of investment banking for the Philippines. Huang’s
move was a promotion; she had been at the firm in Manila since 2004. Credit
Suisse hired Escaler from Goldman Sachs in Singapore, where he worked for
roughly the past four years. Both report to Asia Pacific co-heads of investment
banking Vikram Malhotra and Helman Sitohang.
“The Philippines is the darling,”
said a Singapore-based banker, away from Credit Suisse. “Everyone wants to
invest in the Philippines.”
Credit Suisse’s new appointments
reflect as much. Huang and Escaler jointly replace Simon Paterno, who has been
tapped by CIMB Bank to be president of Bank of Commerce once the Malaysian bank
wins regulatory approval for the purchase of 58% of the lender, according to a source.
Paterno joined Credit Suisse in
2004 from the state-owned Development Bank of the Philippines, where he was
president and CEO.
In May, Malaysia’s CIMB agreed to
buy a 58% stake in Manila-based Bank of Commerce from San Miguel Corp. CIMB
also recently bought Asia assets from RBS.
Meanwhile, Barclays appointed
Agung Prabowo to head investment banking in Indonesia this month. He joined
from UBS, where he was an executive director. Prabowo replaced Sity Leo
Samudera, who retired earlier this year.
Caught napping
Malaysia, too, has been one of
more lucrative centrepieces for investment bankers. Significantly
oversubscribed IPOs from Felda Global Ventures, in June, and IHH Healthcare, in
July, have given bankers cause for optimism – and a little opportunism.
Firms that did not have enough
focus on Malaysia this summer do not want to make the same mistake twice.
“They are repositioning resources
to this part of the world,” a banker said. “You had these major deals for IHH
and Felda and others, and all of a sudden a lot of banks found they were caught
with their pants down.”
But being successful does not
only mean having bankers on the ground. Some big Asian lenders are waiting for
markets in the whole of Asia to pick up before investing much more on new,
locally based talent.
“Of course I would like to have
someone on call throughout South-East Asia, but the reality is you can conduct
the same business out of Singapore and Hong Kong,” a banker said.
Timothy Sifert
Business & Investment Opportunities
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