In May, we announced the winners of this year's Country Awards. Today, we are pleased to announce the rationale for our decisions covering India, Indonesia, Malaysia and Mongolia.
Details of the winners for: Bangladesh, China, CLM (Cambodia, Laos and Myanmar) and Hong Kong - including Hong Kong's Chinese financial institutions - can be viewed here; Pakistan, the Philippines, Singapore, South Korea and Sri Lanka can be viewed here; and Taiwan, Thailand and Vietnam can be viewed here.
Congratulations to all the winners.
BEST BANK: HDFC Bank
HDFC Bank continues to achieve industry-leading metrics in many areas and was the clear winner for another year. To put this achievement into perspective, HDFC rakes in half the revenues of industry leader, State Bank of India (SBI), but is one third more profitable.
It remains India’s most profitable bank. Indeed that profitability continued apace during the most recent 2021 Financial Year.
Assets rose 22.25% to Rs17.99 trillion ($245.97 billion) and net profit was up 11.14% to Rs272 billion, according to S&P Global Market Intelligence data.
Unsurprisingly, this meant that HDFC continues to trade at a valuation premium that only a very small handful of Asian banks are able to command. As India’s most deadly Covid wave started to settle down in late spring 2021, HDFC was comfortably trading at over four times book value.
S&P data shows that ROAE stood at 16.63% in 2020, ROAA at 1.96%, NIM at 4.48% and COR at 41.55%. The bank was able to improve some of these ratios during FY21 despite a difficult backdrop thanks to the pandemic.
NIM only dropped a few points to 4.13% thanks to the bank’s strong deposit franchise, while its COR improved to 40.79%. ROAE came in at 16.51% and ROAA at 1.92%.
HDFC Bank also posted impressive gains in loans to micro-, small- and medium-sized enterprises (MSMEs). This is a core target sector, rising from 14% to 20% of its overall loan book over the last few years.
Earlier this year, the bank launched a new strategy it dubs “Project Future – Ready”. This involved a deep dive into its overall business structure through three core elements: business verticals such as retail and corporates; delivery channels such as branches and tele-sales; plus technology and infrastructure.
For the last few years, HDFC has also retained an A rating on MSCI's ESG scale, ahead of the competition in India. To enhance its focus in this area, the bank recently announced plans to be carbon neutral by 2031 and incorporate ESG scores in all of its credit decisions.
BEST INVESTMENT BANK, BEST ECM HOUSE: Kotak Investment Banking
With around 90 professionals across M&A advisory, ECM and private equity, Kotak Investment Banking has had a leading position in India for many years and it was the clear winner for this award for yet another one.
It is always M&A that enables Kotak to clinch the overall award against much stiffer competition in ECM and DCM. This year, the firm closed and/or announced 13 M&A transactions during the awards period with an aggregate value of around $7.8 billion across diverse sectors and a variety of products, both in listed and unlisted companies.
This included the $1.3 billion equivalent acquisition of Embassy TechVillage by Embassy REIT, and the $11.3 billion reorganisation of the Motherson Group. Kotak acted as exclusive financial advisor for Motherson, which wanted to simplify its corporate structure and bring all of its auto component businesses under one brand.
In terms of ECM, Kotak played the role of left lead bank on 16 deals, demonstrating its domestic prominence and helping it to scoop the ECM award as well. Prominent transactions included IPOs for Indigo Paints and Gland Pharma.
It also executed the largest post IPO follow-on for any Asian Reit with a $501 million equivalent deal for Embassy Reit. This marked the first-ever institutional placement by an Indian Reit, helping to set a new benchmark for an expanding sector in the domestic capital markets.
Kotak also executed numerous other placements and rights issues including Reliance industries’ record-breaking Rs531 billion ($7.05 billion) transaction. This represented India’s largest ever equity deal and formed the centrepiece of the group’s deleveraging efforts.
Kotak was one of only two global co-ordinators managing a large syndicate of bookrunners. More importantly, it helped to craft a structurally innovative offering that enabled the mammoth deal to sail through the market.
As a result, the Reliance deal also garnered one of FinanceAsia’s three South Asian deals of the year during the most recent 2020 Achievement Awards.
In DCM, Kotak continues to tick along, picking and choosing a clutch of high-profile structured bond transactions and non-convertible debentures across the corporate, financial and real estate sectors.
BEST DCM HOUSE: Axis Bank
Axis Bank’s leadership in DCM is clear from its consistent ranking at the top of the league tables. During the latest awards period, for example, it worked on 181 issues, earning it a market share of nearly 18%.
This is fuelled by strong clientele relationships across all investor classes, as well as a pan-India dedicated origination and sales team. The bank also has one of the largest proprietary books, giving it greater ability to underwrite, hold and distribute transactions.
During the awards period, Axis bank was one of the largest mobilisers under the Reserve Bank of India’s (RBI) TLTRO (targeted long-term repo operations) scheme. It was able to leverage its resources to lend and structure transactions for issuers at competitive rates despite the pandemic.
Axis Bank had a strong year in what was a banner year for Indian DCM, as triple-A yields tightened from the 6.5% level in March 2020 to around 4.7% by December. The conducive backdrop, boosted by the RBI’s $15 billion stimulus programme, re-opened the debt markets for smaller borrowers.
One aspect that always makes Axis stand out whenever it wins this award is the number of deals where it acts as sole arranger. One standout, in this regard, was a Rs10 billion ($133.4 million) deal it executed for Grasim Industries.
The flagship company within the Aditya Birla group wanted to stretch out its maturity profile and issue at the 10-year point of the curve. Axis Bank was able to get the triple-A rated credit a 6.99% coupon at a time when yields were starting to rise again.
BEST BROKER: Edelweiss Institutional Equities
For Edelweiss Institutional Equities, business since Covid-19 has been full of challenges, but performance too.
It recognised the challenges and opportunities that its own business faced by making this the theme of its annual conference, which it held in February 2021. Each year, it produces a hefty piece of research to tie in with the conference and this year it was titled the New Order.
The overarching theme was the new paradigm for India in a post-Covid world. It covered multiple new industry sectors including: green energy (economics and lower capital costs are the real drivers); real estate (the working from home legacy); digital (government redressing shortcomings through “Digital India” mission); and healthcare (quick funding and years of advanced research led to rapid vaccine development).
Edelweiss had another good year earning the highest revenue it has ever achieved. It signed up 49 new institutional accounts and grew absolute commissions from its top 20 accounts.
On the distribution side, it successfully executed six high-quality IPOs and targeted private equity blocks including the placement of a 6% stake in Bajaj Auto and 9% in Amber Enterprises.
Edelweiss’ agility was especially clear amid the challenging landscape. The firm anticipated the change to low-touch business, so invested in enhancing its trading technology. It launched a fully automated research platform, and pivoted from physical to fully virtual events. Within the space of a year, its low touch business rose 30%.
Its top research call was Persistent Systems, which has quadrupled since it made its call in June 2020. As of July 2021, Apollo Hospitals had shot up more than 200% since Edelweiss gave it an outperform rating in September 2020.
BEST PRIVATE BANK: Kotak Wealth Management
India’s equity and debt capital markets had a very good 2020 and this was reflected in the performance of Kotak’s private banking arm, Kotak Wealth Management. This, plus the group’s leading edge products and platforms, enabled AUM to shoot up from 306,000 crore ($41 billion) as of December 2019 to 370,000 crore as of December 2020.
Kotak has once again shown that it has no competition in this category. It now banks 51% of the country’s top 100 families in the Forbes list.
Over the past couple of years, it has made the transition to an annuity business model very successfully. It also highlights that despite the change in business model, it continues to focus on the key pillars of AUM and client acquisition.
Kotak continues to innovate via its product offerings. It has, for example, played a key role in the development of Reits as an asset class in India.
It has also created one of the first discretionary asset allocation-based platforms for clients, Kotak Optimum, which was launched at the tail end of 2019. This gives investors single click access to multiple fund managers, cutting down on documentation in the process.
The firm has also improved its digital platform and solutions, spurred by a key objective to improve customer experience and enhance productivity. These efforts have resulted in increasing adoption of mobile and online banking to 83% of its active clients.
BEST BANK: Citi
Citi continues to deliver a strong performance in India and remains the largest foreign bank in the country. It hopes to stay that way despite the global decision to sell off its retail franchise.
This means that the US bank is continuing to invest in the country, adding around 3,200 professionals during the 2020 calendar year to take it over 22,000 employees in total.
Its most recently released financial results are still for the year to the end of March 2020, when it registered a post-tax profit of $650 million. This was up 18% year-on-year.
This figure shows just how much larger and more profitable Citi has always been in India compared with the competition. S&P Global Market Intelligence data shows Standard Chartered on $399 million, HSBC on $391 million and Deutsche Bank $145 million at the same point.
Citi’s corporate bank in India is the bedrock of its operations, holding the number-one market position. It is this business, which it will continue to focus on.
It retains its strong position among MNCs, where it has a leading 29.5% market share.
Within treasury and trade solutions, Citi also remains the leading foreign bank in electronic cash management with a market share of 6% of India’s domestic flows. It was also the largest foreign bank for consumer-to-business flows via India’s instant real-time payment system, UPI, with a 37% market share amongst foreign banks as of March 2021.
Over the past year, it also had an 8% market share of India’s trade flows, with 9% of export flows and 10% of import flows.
Other sectors where it remains number one include the largest custodian, with assets under custody totalling $340 billion as of March 2021. It has a 26% market share of foreign portfolio investor flows and 25% of mutual fund flows.
BEST INVESTMENT BANK: Bank of America
This is a new award for Bank of America (BofA) in India and an extremely well deserved one after an exceptionally strong year, although it faced very tough competition from Morgan Stanley.
Dealogic data shows that Morgan Stanley beat BofA in the M&A stakes thanks to one very important client: Reliance Industries. The US investment bank helped the group’s next generation technology company, Jio Platforms, to raise a staggering $20.3 billion from 13 of the world’s biggest tech and financial investors in the space of just three months.
But it was the other way round in ECM where BofA logged $3.07 billion to Morgan Stanley’s $2.84 billion according to Dealogic data. Neither bank was as strong as some of their competitors in DCM, but BofA did have a roster of five deals, and this is ultimately what helped to tip the award its way.
During the course of the awards period, it was a joint global co-ordinator on: a $750 million deal for Adani Port & Logistics; a $900 million inaugural subordinated perpetual for UPL; and a $600 million bond for SBI. It was also a bookrunner on deals for HCL Technologies and Airtel.
BofA’s leading ECM performance included: the second and third Reit IPOs in India, for Mindspace and Brookfield, respectively; a public offer for Yes Bank (one of the largest primary offerings by a private sector Indian issuer); and a $7.1 billion right issue for Reliance (the country’s largest ever equity transaction).
But undoubtedly the highlight was BofA’s role as the sole bookrunner for Standard Life Aberdeen’s $2.7 billion monetisation of its stake in its former joint venture partner HDFC Life. This was executed across 21 months and seven separate transactions.
Other sole led deals included Carlyle’s $542 million sell-down in SBI Card and ZF’s $189 million sell down in Wabco.
BofA also showed its prowess in M&A in two hot sectors: SPACs (special purpose acquisition companies); and renewables. Where the former was concerned it advised ReNew Power on a $3.58 billion takeover of Nasdaq-listed SPAC RMG Acquisition Corp II.
In terms of the latter, BofA acted as the sole advisor to Greenko on the sale of a minority stake to Japan’s ORIX Corp. At $980 million, this represented the largest transaction by equity value in Indian renewables and also symbolised strengthening ties between India and Japan.
BEST BANK: PT Bank Central Asia
The e-money revolution is growing faster in Indonesia than the rest of South-east Asia so domestic banks have a fight on their hands to keep hold of their customers and their money. Over the past couple of years, BCA has responded by expediting its digital strategy and done a good job in expanding its market share.
It has adopted an open banking approach, collaborating with fintechs in a bid to build up its ecosystem. The pandemic has also spurred strong digital migration and in 2020 the bank reported a 46% increase in the number of customers using online banking and a 98% increase in online transaction volumes.
When FinanceAsia was conducting this year’s awards pitches, the bank was in the final stages of rolling out a new omni-channel, super app called myBCA. This deploys one ID to consolidate all of a customer’s business in one place including for example, BCA’s wealth management app, Welma.
One of the BCA’s great advantages is its CASA ratio and this continued to improve throughout 2020. Low cost deposits rose 21% to Rp644 trillion ($44.6 billion). This resulted in an end-of-year CASA ratio of 76.6%
Covid-19 meant that the bank was unable to hit its loan growth forecasts during 2020. It did book more business loans, which were up 5% year-on-year, but utilisation rates dropped. It also put 16.9% of total loans into credit restructuring amounting to Rp97.5 trillion.
But one of the reasons why BCA wins this award every year is because of its risk controls. It took a conservative stance on provisioning, booking Rp11.6 trillion in 2020, compared to Rp4.6 trillion the year before.
This policy, plus its strong CAR of 25.8%, puts the bank in a good position to emerge on the other side of the pandemic during 2021. As the second quarter progressed, the bank was started to report a far more improved economic outlook that it intends to take full advantage of.
Retail customers are reviving and the bank now believes that mortgage will tick back up 6% year-on-year after being flat for the whole of 2020.
BEST INVESTMENT BANK, BEST DCM HOUSE, BEST BROKER: PT Mandiri Sekuritas
Indonesia is a country whose capital markets are still dominated by SOEs particularly when it comes to M&A and DCM. This puts Mandiri in a very strong position since it is very clearly the investment bank of choice for the country’s large government-owned and linked groups.
They trust its advice because it understands their needs. It now has a long track record of sizeable, successful and complex deals.
Last year, it added to that tally a lot further. It was, for example, financial advisor to JakPro and Jaya Group on the tender sale process of a 35% stake in Jakarta’s strategic toll road (Marga Lingar Jakarta). Astra Infra won the bid after submitting the highest valuation multiple yet for an asset in the Indonesian toll road sector.
It was also a financial advisor to seven SOEs on the sale of a majority stake in their hospital subsidiaries to Indonesia Healthcare Corp (ICH), which is part of the Pertamina Group. The Rp1.5 trillion ($103.9 million) deal effectively doubles IHC’s operational network.
However, one of its largest advisory mandates was its buyside work for Hong Kong’s FWD, which paid Rp6.2 trillion to take a significant minority stake in BRI Life. The transaction enables FWD to expand its product outreach in Indonesia, while BRI hopes it will help to unlock more value in its insurance business.
One important financing trend is ESG. A number of Indonesia’s largest companies are taking their first steps along this road and Mandiri is at the forefront in helping them to transition.
One good example is the Sinar Mas Group, which sold a 75% stake in a company, which owned three large-scale power plants in Sumatra and Kalimantan. Mandiri ensured that the lenders consented to the deal, which China’s Datang Corp won after submitting a $394 million bid. Proceeds are being ploughed into renewable energy projects.
Another key transaction was Indika Energy’s $450 million high yield bond deal in October 2020. Being a coal producer does not tick many investment boxes these days.
Having Mandiri as a lead manager was doubly important to the group. It not only meant that Indika got good execution but Mandiri’s bankers were also able to reassure investors that the commercial bank remained committed to Indika as it makes its transition to energy storage.
The resulting five-non-call two-year deal was a huge success and was trading up eight points in the secondary market within the space of a month.
One of the reasons why Mandiri also has a strong lock on FinanceAsia’s DCM award is because it is the only Indonesian entity to feature in Dealogic’s top 2020 for international bond deals. During the awards period, it held the number five spot.
The bank records a total of 16 G3 currency bond deals with $2.3 billion in face value during the awards period. In addition to Indika, it was also a lead on another interesting transaction: a $600 million offering for toll road construction company Hutama Karya.
This was the first time that an Indonesia deal carried an explicit government guarantee. It meant that the 10-year transaction could be priced at half the premium, which other SOEs were trading over the sovereign at the time.
Other benchmark dollar-denominated offerings included a $1.45 billion offering for state-owned Pertamina. The oil & gas giant’s 40-year tranche marked the first from the country. Mandiri was also the lead on a $1.5 billion dual tranche offering for electricity utility PLN.
In the domestic bond markets, Mandiri and Indo Premier are pretty much neck and neck. In 2020, Mandiri had a 15.3% market share, leading 47 issues with a face value of Rp10.7 trillion.
One standout was not a bond, but a debt restructuring. Mandiri was the financial advisor to plantation group PTPN Group over its Rp41 trillion debt.
Similar to previous years, the bedrock of Mandiri Sekuritas is its broking business. As in so many Asian markets, 2020 was a year when retail clients went digital. There were also a lot more of them.
Mandiri saw an explosion of volumes on its online platform, MNC Trade New. In the year to March 2020, it had contributed 37.6% of Mandiri’s revenues.
This jumped to 71% in the following year. Transaction volumes also spiked by more than 600%.
There was also a shift from institutional to retail. The latter contributed 89.58% of Mandiri’s brokerage fees during the awards period, with institutions the remaining 10.42%.
There was another marked shift away from foreign investors. They contributed just 4.83% of Mandiri’s total commission, with local investors accounting for 95.17%.
Indonesia has fallen a little off many foreign investors’ radar. It has suffered from a double whammy. China increasingly accounts for a larger share of the MSCI indices and Indonesia also lacks sizeable tech stocks.
Foreign banks have consequently found it hard to maintain their market share and many have been pulling back. Mandiri sees this as a long-term opportunity, the reason why it has forged co-branded research partnerships and distribution agreements with international firms like Jefferies.
BEST ECM HOUSE: PT Indo Premier Sekuritas
This is the third year running that Indo Premier has won this award, a testament to its expertise in bringing complex transactions to market. It needed that experience again in 2020 in the face of another difficult year for Indonesian equity markets.
There were few IPOs and none above $100 million. Neither fact was very surprising given the performance of the Jakarta Stock Exchange Composite Index (JCI), which lost one third of its value in the space of three months after Covid-19 first struck.
The market recovered during the second half of the year, but it was still trading around 15 times forward earnings when FinanceAsia was considering this year’s awards, below its five-year average around the 14.5 times mark.
It was against this backdrop that Indo Premier executed an Rp208 billion ($14.4 million) IPO and an Rp970.7 billion convertible conversion for PT Soho Global Health in September. Concurrent to the IPO, the securities house also issued new shares through a Management Incentive Programme (MIP).
There were a number of complex steps bringing the pharmaceutical company to market including a pre-IPO restructuring to convert multiple share classes into one set of common shares without triggering regulatory lock ups. The MIP was also a fairly uncommon structure that required plenty of regulatory to and fro.
The resulting public deal was only 0.6% of the company’s issued share capital. It was too all intents and purposes a technical listing that should set the stage for a larger secondary deal further down the road, as Indo Premier previously did for PT Map Aktif.
Its second benchmark deal of the year was an Rp803 billion rights offering for PT Bank IBK Indonesia, executed in April 2020. This was the final stage of its takeover of PT Bank Agris and PT Bank Mitraniaga in 2018. It completed the buyback of their shares in 2019, with proceeds from the rights issue being used to increase IBK’s equity base.
Indo Premier has a strong investment banking franchise, bolstered by a brokerage one with equally strong momentum. It notched up an impressive number of new retail accounts during 2020, to the tune of almost 1,000 a day.
It went from 240,000 at the end of 2019 to 463,000 at the end of 2020 and had breached the 600,000 mark by the end of the first quarter of 2021.
BEST PRIVATE BANK: Mandiri Wealth Management
Mandiri’s Wealth Management division has come a long way in recent years and during the most recent Financial Year accounted for 5% of the bank’s overall revenue.
However, the division barely gets a mention from financial analysts covering the stock, which shows just how much potential wealth management has in Indonesia. The country appears to be reaching an inflexion point when private banking should start to take off as it has done around other slightly richer Asean nations.
When it does, Bank Mandiri is well positioned under the leadership of Elina Wirjakusama who has headed the wealth management division since 2015. Asset growth has been steady around the 8% range for a few years.
In 2020, for example, the bank recorded 8.2% growth in AUM to Rp233 trillion ($16.11 billion). This had a split of Rp148.9 trillion banking products, Rp40 trillion bonds, Rp29 trillion mutual funds and Rp14 trillion unit trusts.
The bank says that this equates to an investments-to-deposit ratio of 36.2%. Indonesian investors are still very conservative and local in outlook, a mindset reinforced by domestic regulations limiting international investments.
Mandiri has ventured offshore to Singapore to help its 1,500 private banking clients to diversify. The minimum asset requirement for the private bank is currently Rp5 billion compared to Rp1 billion under Mandiri Prioritas, which has 51,000 clients.
In 2018 it formed a partnership with Lombard Odier. This alliance has enabled Mandiri to start talking to its clients about wealth and success planning in addition to introducing risk based portfolio management.
BEST LAW FIRM: Hiswara Bunjamin & Tandjung
This year marks a hat trick for a law firm that marries local expertise and global reach through a two decade-plus partnership with Herbert Smith Freehills.
It currently operates across 11 core practice areas: corporate/M&A, banking & finance, capital markets, dispute resolution, restructuring & insolvency, projects & energy, IT & telecoms, competition, real estate, labour & employment and foreign firms.
Its work therefore spans the whole gamut of financing opportunities in Indonesia from start-ups that are just beginning their corporate journey to those at the other end that have got into difficulties.
On the one side was its work for state-backed, e-money group, Fintek Karya Nusantara (LinkAja). There has been an explosion of e-wallets in the group and Hiswara Bunjamin helped this one to secure its future by advising it on its $100 million Series B fundraising round.
At the other end of the spectrum was indebted mining group Atlas Resources. Hiswara Bunjamin acted for two of its creditors seeking redress over debt valued at $384 million: Batubara Global Energy (the local subsidiary of LG International) and Standard Chartered Trade Support.
The law firm created a precedent for Indonesian restructuring by having Batubara’s claim admitted as a contingent liability pending the results of ongoing legal action.
Hiswara Bunjamin has very good relationships with Indonesia’s SOEs and during the awards period, one of its landmark mandates was for Indosat. A $750 million sale and leaseback of around 4,200 telecom towers to EdgePoint (a Digital Colony subsidiary) was completed in an extremely tight timeframe of just 10 weeks.
In December 2020, Herbert Smith launched a global ESG leadership team to consolidate its expertise across geographies. Indonesia has been a shining star following its work on the first Indonesian green corporate bond to secure an investment grade rating.
Star Energy Geothermal Salak-Darajat’s $1.1 billion amortising green bond also won FinanceAsia’s ESG bond of the year for our 2020 Achievement Awards.
BEST BANK: Citi
The reason Citi has won this award for so many years is because it acts as such a good bridgehead for local clients heading out of Indonesia and multinational clients heading in. Until it decided to close its retail operations towards the end of the awards period, it was also very balanced across all the main product areas.
Some of Asia’s fast expanding home-grown banks have a bigger overall presence in the country in terms of assets. But in 2020, Citi was still able to leverage its global expertise to best effect.
In the process, it recorded some very efficient ratios. These not only beat its international peers but most of Indonesia’s leading local banks as well.
The US bank reported an ROE of 15% and ROA of 3.9%. Its CAR also increased from 26.7% to 28.3%.
One of its most active business lines is trade and treasury services. It booked a whole host of new mandates during the awards period. Perhaps the most important was one from the central bank utilising Citi’s WorldLink system for cross currency payments.
It also won mandates from a clutch of the country’s most famous unicorns. Traveloka is now using Citi’s liquidity management solutions, while Lazada Indonesia has appointed it to provide cash management ones.
But every year, it is Citi’s lending that stands out, whether that’s for multinationals or the country’s leading borrowers. In the former’s case, Citi extended $50 million to South Korea’s Hyundai Motor, which is setting up its first factory in the country.
When it comes to the latter, the list is extremely long. A couple of examples include a Rp2.66 trillion ($183.9 million) loan to GarudaFood and $350 million syndicated revolving loan for the Adaro Group.
Citi has a strong investment banking platform in the country and it is always on the shortlist to win. Highlights this year included advising Telkomsel on a $150 million investment in ride hailing and payments company, Gojek.
There were also numerous bond mandates from a $500 million subordinated Basel III offering for Bank Negara Indonesia to the sovereign’s $4.3 billion multi-tranche deal in April 2020.
BEST INVESTMENT BANK: Deutsche Bank
For many years, this award has been a tussle between Citi and Credit Suisse. But there is one bank that has been steadily building up its presence, a process that accelerated after rivals lost senior rainmakers.
Deutsche has always been a DCM powerhouse, particularly in the sovereign and high yield space. Indonesia’s issuance pattern fits that bill perfectly and it therefore it was not very surprising to see just how dominant Deutsche was during the awards period.
The German bank has a strong relationship with the sovereign and has now acted on seven of its eight SEC registered transactions. This included the establishment of its inaugural $10 billion SEC Shelf back in 2018.
During the awards period, it was a bookrunner on both of the Republic’s jumbo multi-tranche conventional offshore deals: its April 2020 $4.3 billion offering and its January 2021 $4.2 billion euro and dollar-denominated one. The April deal was particularly noteworthy as it included the first-ever 50-year tranche from an Asian sovereign.
Deutsche is well known for its structuring skills and these were repeatedly at the forefront. In May 2020, it was a bookrunner on the first Indonesian government guaranteed offshore bond deal: a $600 million offering for toll road construction company Hutama Karya. The government guarantee meant the 10-year deal was priced at half the premium that other SOEs were trading over the sovereign.
Likewise, Deutsche was one of the leading lights on FinanceAsia’s regional ESG bond deal of the year in our 2020 Achievement Awards: Star Energy Geothermal Salak-Darajat’s $1.1 billion amortising green bond. This deal also demonstrated another one of its top trumps: its ESG expertise.
Deutsche has a client roster that return time and again. One of the most important is Indika Energy, which is trying to reduce its reliance on coal to less than 50% of its revenues by 2025. Last year, Deutsche managed a consent solicitation, which helped to term out the majority of its debt to 2024 and 2025.
But it wasn’t all about DCM and this is why Deutsche sailed ahead of the competition. Dealogic data shows that it was also an advisor on the two largest M&A deals from Indonesia as well.
It advised Indofood CBP on its $2.998 billion acquisition of noodle producer Pinehill. This was a deal that helped the Indonesian food producer to diversify geographically (Africa and the Middle East) and into halal products. It was also able to achieve a reasonable valuation of 23 times forward earnings according to one analyst.
Deutsche was also a sell-side investor for the $1.2 billion sale of personal care products producer PT Softex by CVC Capital and other shareholders to New York-listed Kimberly-Clark.
BEST BANK, BEST SUSTAINABLE BANK: Public Bank
It was a challenging banking environment in Asia during 2020, but especially so in Malaysia because the country was locked down more often and for longer than many of its neighbours. Businesses survived because of the government’s accompanying relief measures and these also kept NPLs at very manageable levels across the whole banking sector.
Public Bank was affected, but all of its asset, profitability and efficiency ratios stood head and shoulders above the competition. Only 11% of its domestic loan book ended up under the government’s Targeted Relief Assistance programme (TRA), for example.
This means that its NPL ratio is likely to remain at a very low level throughout 2021. It ended the 2020 Financial Year at 0.36% according to S&P Global Market Intelligence data.
Every year, we note how important Public Bank’s risk and operational control measures are to its long-term success. A pandemic was always going to shine a positive spotlight on this and 2020 certainly delivered.
The bank adopted its customary prudent stance on provisioning with a 227.7% loan loss coverage ratio at the end of 2020. During the course of the Financial Year, it also boosted its CAR from 17.32% to 18.01% and reduced its cost-to-income ratio from 34.36% to 33.08%.
By contrast, both CIMB and Maybank reported cost ratios above 40%, NPLs above 2% and single digit ROAEs compared to Public Bank’s 10.7% level on the latter figure according to S&P.
This enduringly strong foundation set Public Bank up very well for a far more positive first quarter of 2021: one that even beat financial analysts’ expectations. An improving CASA ratio (up 21.2% year-on-year) to almost 29% and a NIM, up 22 basis points quarter-on-quarter, to 2.28% were two of the standouts.
Public Bank was back, firing on all cylinders. There was a particularly strong performance by its unit trust business, Malaysia’s largest.
When the bank was founded just over half a century ago, its mission was to serve the needs of ordinary people. Financial inclusion is important to Public Bank.
Public Bank is the only Malaysian Bank that has had a double-A ESG rating from MSCI since 2016. It shows in the way that it delivers its services.
It promotes access to affordable financial services and has become a leader in encouraging Malaysian citizens to think with an ESG mindset when making important financial decisions throughout their lives. Recent examples of its ESG retail-driven approach include an M$134 million ($32.2 million) Energy Efficient Vehicle Campaign, which has helped 1,400 customers to buy energy-efficient vehicles.
In late 2020, it also launched Solar Plus BAE Personal Financing-i to encourage better take up of rooftop solar panels. So too, it is a participant in the government’s Green Technology Financing Scheme to encourage corporate investment in biogas and solar energy.
Public Bank also takes a rigorous approach to its own lending activities, adopting the central bank’s Climate Change and Principle-based Taxonomy for all new loans. Loans are classified based on their climate risks.
Public Bank also has an exclusion list, which includes businesses that use forced, or child labour.
Its unit trust arm is offering ESG investments now as well. In 2019, it launched a first sustainability-focused fund: the Public e-Islamic Sustainable Millennial Fund. This invests in shariah-compliant global stocks that incorporate sustainability considerations in their business practices.
In 2021, it built on this success with the launch of a Public e-Carbon Efficient Fund. As the name suggests, this invests in companies with an efficient carbon footprint.
Public Bank always wants to do its best and to do better at whatever it does. As such, in 2020 it reached out to more than 1,300 key stakeholders – customers, investors and employees – via an online engagement survey to gather their views on what sustainability aspects it should prioritise. When next year’s awards roll around, it will be interesting to see how it implements their suggestions.
BEST INVESTMENT BANK, BEST ECM HOUSE, BEST DCM HOUSE: Maybank
It’s a clean sweep for Maybank across all the investment banking product areas and well deserved. The country’s largest bank by assets and profitability was also number one in Dealogic’s ECM tables, M&A league tables and ahead of arch-rival CIMB in the DCM league tables when both domestic and G3 currency bonds were combined.
On the ECM side, the country’s largest offering of the year was a twin-headed monster in the best possible sense, after Petronas executed the market’s first-ever concurrent placement and its own debut accelerated bookbuild.
Maybank and JP Morgan won the mandate after a competitive bidding process and in mid-December, the oil giant successfully pared down its stakes in energy shipping solutions group MISC Berhad and the Reit, KLCC Stapled Group. Together, the two raised M$3.05 billion ($730.68 million).
Maybank was also one of the leads for: the country’s largest IPO of the year and largest-ever retail IPO for Mr DIY, which raised M$1.51 billion; the fourth and final divestment in RHB Bank by Abu Dhabi’s Aabar raising M$932.4 million and a M$710 million primary placement for Sunway Reit.
This means that Maybank was the lead on five of the market’s seven largest deals of the year.
Its dominance was even more pronounced in M&A where there was a huge amount of clear water between itself and the rest of the Dealogic league table thanks to its work as the principal advisor on the $2.36 billion restructuring of the Federal Land Development Authority (Felda).
In late December, the government group announced a mandatory general offer for its Bursa listed plantation subsidiary Felda Global Ventures Holdings (FGV). In March it announced that it had boosted its stake from 34% to 81% after teaming up with a second large shareholder.
It is complex deal, not least because the parent and its subsidiary have been at loggerheads over the mooted privatisation plan, with the former keen to delist the latter and the latter’s management just as keen to stay public.
Less controversial and probably infinitely more satisfying for Maybank was its buy side advisory role for IHH Healthcare Berhad. The listed healthcare group spent M$1.02 billion to purchase Prince Court Medical Centre from Pulau Memutik Venture in a deal that closed at the height of the pandemic.
On the DCM side, it was a very close call between CIMB and Maybank. The reality is that they both executed a similar number and a range of interesting deals in the domestic bond markets.
Maybank issued more paper for Malaysian borrowers in the international markets, but there were a number of self-led deals. In terms of size, the outlier was the $6 billion 10-year, 30-year and 40-year bond for Petronas Capital.
The offering was executed at the very height of Covid-19’s first wave. Petronas had to make a difficult call whether to access the market at a time when no one knew how long the pandemic would last, or how bad it would get. In the end, the deal proved to be a good one for investors after each tranche traded up very strongly in the secondary markets.
The Malaysian bank is also building a strong regional platform and 2020 saw it take a bookrunning role on a number of deals for: the Indonesian government, its state-owned aluminium smelter PT Inalum and China’s ICBC.
Back home, its proudest achievement was being appointed the sole primary distribution bank for the government’s Sukuk Prihatin. Maybank was entrusted with the establishment and issuance of this unusual M$666 million offering. It represented Malaysia’s first digital sukuk, executed during August 2020’s lockdown through an entirely online subscription process.
But what made the transaction really stand out was the way that it was structured to rally citizens and create a sense of national solidarity. Bondholders had the option to donate their holdings to a Covid-19 fund run by the Ministry of Finance either at the outset or at maturity. In return they get a tax exemption.
Other bonds that Maybank executed with an ESG theme included an M$800 million deal for Sime Darby Property Berhad. This marked the first sustainability sukuk from a Malaysian property developer.
BEST BROKER: CGS-CIMB Securities
It’s been a remarkable 12 months for CGS-CIMB as it continues its evolution from a Malaysian top three broker to a regional powerhouse. This unique mix of domestic expertise and international expansion is a winning combination, particularly where this award is concerned.
Take Islamic finance. It’s the bedrock of Malaysia’s capital markets and CGS-CIMB is using it as a springboard to become a regional leader in Islamic broking.
In 2020, it completed phase one of a three-step plan. In April, it became the first broker to launch retail Islamic Cross-Border Trading (ICBT), having opened 1,840 new accounts.
The next phase will see it increase its Islamic product offerings to include sukuk trading, e-wealth management and Islamic stock borrowing.
Malaysian investors have long had a reputation for staying local and adopting a conservative investment mindset. However, that’s changing and it is CGS-CIMB they are turning to as they venture offshore.
The brokerage is ideally placed to capture this business given its current 50/50 shareholding split between CIMB and China Galaxy Securities.
The group is aiming to create a kind of “Star Alliance” for brokers and has rapidly built up partnerships with specialists across the world. In 2020, it added new partnerships with Dai Nam (Vietnam) Liberum (Europe), Okasan (Japan) and Raymond James (US).
This builds on existing ones with Capital Securities (Taiwan), Incred Capital Wealth (India and Sri Lanka) Morgans (Australia) and SB Equities (Philippines).
CGS-CIMB’s digitalisation strategy also continues apace with online client on-boarding launched in October 2020.
It also expanded its services for existing clients. Standouts include Margin Lite in July 2020. This is aimed at investors with smaller portfolios who still wish to add some leverage.
The group’s distribution capabilities also remain as strong as ever. During the awards period, CGS-CIMB executed a strong roster of placements including deals for: Tenaga M$1 billion ($241 million), Serba Dinamilk M$457 million, My EG Services M$216 million and Mr DIY Group M$1.01 billion.
BEST PRIVATE BANK: CIMB Private Banking
There is a new CEO at the helm of the overall CIMB Group, but private banking will remain one of the chief focuses of the group’s refined Forward 23+ strategy.
CIMB is Malaysia’s largest private bank by AUM and it has no intention of losing its crown any time soon despite the departure of the queen who used to wear it, Carolyn Leng who departed for Maybank in 2019.
Assets grew a very impressive 22% during 2020 to reach $14.3 billion. That means the bank has been able to maintain a 22% CAGR from 2018 to 2020 despite the advent of more and more competition in the private banking space.
It has done it by forging deeper relationships with its clients. As a result, the average AUM by client grew 18% during 2020.
The bedrock of its client base remains those with assets of $5 million and above. Their contribution grows more strongly by the year as well, rising from 67% of overall AUM in 2018 to 76% in 2019 and 79% in 2020.
One important new business strand comes from millennials. The bank set up a dedicated Millennial/second generation team three years ago.
It also trying to forge better cross-referrals across the group and one good example of this in action concerns a start-up millennial entrepreneur. CIMB financed his purchase of a 70% stake in a listed company, whose value then climbed 150% in less than a year.
There is also strong collaboration with the investment bank. CIMB reports that 70% of its millennial clients participated in IPOs where the bank was a lead manager.
CIMB is also seeing good growth in credit solutions such as its Private Banking Credit Lines (PBCL), which has recorded 17% loan growth last year and foreign currency PBCL, up 18% over the same time frame.
BEST BANK: HSBC
It was an incredibly tough year to be a bank in Malaysia during 2020, not least after the government cut its overnight policy rate by 135bp. Nevertheless, HSBC continued to grow during the pandemic: assets climbed 1.6% to M$86.3 billion ($20.7 billion) thanks to a 5% rise in deposits to M$66.27 billion.
In the 25 years since FinanceAsia was founded, HSBC has become a powerhouse in the ringgit bond market. It has sat at the top of the league tables amongst international banks for very many years.
Unsurprisingly it was there again 2020 with a clutch of interesting and innovative transactions to its name. The largest of all was a jumbo $6 billion offering for oil giant Petronas, which stretched out its liabilities thanks to two longer-term 30- and 40-year tranches.
HSBC covers the whole spectrum of debt capital markets in Malaysia. Other deals included: a dollar-denominated liability management exercise for Serba Dinamilk; and a Basel III Tier 2 deal for UOB Malaysia.
One prominent trend in all of HSBC’s awards write-ups this year is ESG. It truly is a regional leader and this was also evident in Malaysia.
In August 2020, it led the first Asean green sustainable and responsible sukuk for Leader Energy. The M$260 million deal marked the group’s debut project financing in the domestic bond market. This year, it also helped the group to acquire a solar plant in Vietnam through a bond buyback.
The other side of HSBC’s business is the financing and advisory work it does for foreign multinationals operating in the country. Notable this year was a $50 million financing for Britain’s Smith & Nephew, which is setting up a 250,000 square foot orthopaedic implants facility in Penang.
The bank is also one of the leading sub-custodians in the country with a roughly 30% market share in listed equities and fixed income instruments for foreign institutions. Assets under custody rose 3% during 2020.
BEST INVESTMENT BANK: Credit Suisse
One of the Swiss bank’s strongest suits tends to be its relationship with government-linked entities. It is true right across Asia and particularly in Malaysia.
Credit Suisse is very good at forging long-term relationships thanks to the stability of its senior leadership team. It is what has helped it to win this award for four years running.
This year six out of the seven ECM transactions it headed in Malaysia came from repeat clients. One of the most important was for the country’s sovereign wealth fund, Khazanah.
In April and May 2020, it executed two block placements for shares that Khazanah held in Telekom Malaysia raising M$736 million ($176.9 million) and in electricity giant Tenaga raising M$1.01 billion.
Its biggest offering of all, however, came from a new client, MR DIY Group. Its M$1.51 billion IPO was the market’s largest of the year.
The Malaysian home improvement retailer’s deal also represented the first IPO above $50 million in over 17 months. Investors loved it. After being priced at M$1.6 per share it had risen to M$3.48 as of mid-July 2021.
Overall, this awards period has not been a banner one for international investment banks. They barely registered on the M&A league tables. In the end, the decision came down to ECM, which was more active.
JPMorgan topped the league tables, but Credit Suisse was not far behind. It also did more deals for a wider range of client types.
Another one of its best clients is Serba Dinamilk and it was at the helm of two primary equity placements during the awards period. The first came in April 2020 and the second in January 2021. Both deals stemmed from the international energy group’s debt management plan in the face of the global oil price slump.
BEST BANK: Khan Bank
This is a big year for Khan Bank; it is celebrating its 30th anniversary and preparing for a very important new landmark as it readies to list on the Mongolian Stock Exchange early next year.
It should be a watershed moment for the benchmark MSETOP Index, which had a pretty spectacular year of its own in 2020 when it rose almost two-and-a-half fold from its Covid-19 low in mid-April.
There is also a new CEO at the helm to steer Khan Bank through the next chapter: Munkhtuya Rentsenbat, who took over from John Bell at the end of 2020. The latter left an impressive legacy.
Khan Bank is embedded in every Mongolian’s life. It has over 30% of system deposits and has been progressively building up its corporate banking franchise to mirror its extensive retail one.
S&P Global Market Intelligence data shows sturdy 14.7% asset growth to $4.245 billion equivalent. This was led by deposits, which rose 23% to $3.2 billion equivalent.
Khan Bank has been proactively rolling out a digital strategy and this picked up pace out of necessity in 2020 thanks to Covid-19.
In July, Khan Bank launched a smartphone app called Pass e-wallet. This encompasses all of a user’s registered cards and allows them to make transactions by scanning a QR code at one of Khan Bank’s 21,000 POS terminals across the country.
One month earlier, it had also introduced a new website to take payrolls. It had previously only offered this service at its branches. It reports that 21% of its corporate customers were using the service by the end of the year.
It also offered a carrot to encourage further online migration by waiving batch transaction fees if customers used the online payroll service. It then extended it through to the end of June 2021.
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