- Bank to add up to eight people combined in Bangkok, Jakarta
- Bond, equity deals in those countries have outpaced Malaysia
RHB Capital Bhd. plans to bolster its investment-banking operations in Indonesia and Thailand where it expects equity and bond sales to increase, as the fourth-largest Malaysian bank seeks new sources of growth outside of sluggish markets at home.
RHB will add up to four people in Bangkok to handle baht-denominated bond transactions, and as many as the same number in Jakarta for its Indonesian debt capital markets and advisory business, Mike Chan, the firm’s head of investment banking, said in an interview last month in Kuala Lumpur.
“We are very bullish in Indonesia and Thailand,” said Chan, 49. Deals in Indonesia are likely in sectors such as plantations, utilities, property and infrastructure, while Thailand will see more transactions involving services and property, he said.
Bond and equity deals this year in the two countries have outpaced Malaysia, where concerns over debt-ridden state investment company 1Malaysia Development Bhd. caused fund outflows to surge and and helped make the ringgit Asia’s worst-performing currency. RHB’s larger competitors CIMB Group Holdings Bhd. and Malayan Banking Bhd. have in recent years also sought to diversify into larger countries outside their home turf.
RHB’s shares fell 0.3 percent to 6.23 ringgit as of 9:10 a.m. in Kuala Lumpur on Thursday, taking its 2015 decline to 18 percent. The benchmark FTSE Bursa Malaysia KLCI Index lost 5.4 percent this year.
Malaysian bond sales have fallen 25 percent this year to 51.2 billion ringgit ($11.7 billion) from a year ago, compared with a 37 percent increase in Indonesia and an 18 percent drop in Thailand, data compiled by Bloomberg show. Equity and rights offerings in Malaysia have dropped 35 percent in 2015 to 16.8 billion ringgit, more than Indonesia’s 18 percent decline and Thailand’s 6.9 percent drop.
RHB ranks third for Southeast Asian local-currency bond sales this year with deals valued at $3.6 billion, or an 8 percent market share, the data show. The firm is poised to end the year four places higher than in 2014, after CIMB and DBS Group Holdings Ltd. For regional equity and rights deals, it’s placed 10th, behind market leaders JPMorgan Chase & Co. and UBS Group AG.
Chan said he expects to handle up to a 15 percent increase in equity and bond transactions in Indonesia next year, and foresees a rise in equity deals in Thailand. His firm’s investment-banking unit has 3,170 permanent employees, 340 of which are in Thailand and 380 in Indonesia, Chan said.
RHB helped manage 15 bond deals in Indonesia this year including sales for PT Modernland Realty and PT Astra Sedaya Finance, an auto loans company, Bloomberg-compiled data show. In Thailand, RHB was involved in seven equity deals, including helping underwrite an initial share sale by Global Power Synergy Co.
In Malaysia next year, transactions may come from buyouts and share buy-backs among mid-sized companies that are valued between 500 million ringgit and 1 billion ringgit, Chan said. Depressed valuations may lead to some companies being taken private, restructured, and subsequently re-listed, said the banker, who was with Malayan Banking before joining RHB in 2010.
Chan said he’s cautious about the near-term prospects for a revival in Malaysian deals. Foreign investors have sold a net 17.4 billion ringgit of Malaysian stocks this year through Nov. 6, more than double the 6.9 billion ringgit of outflows for all of 2014. Investors have shifted out of the country’s assets as concerns over 1MDB’s debt levels prompted street protests and calls for Prime Minister Najib Razak to resign.
“I am optimistic about Malaysia in the long run in view of our established industries, well developed infrastructure, education and legal systems,” Chan said. “In the short run, there are noises.”