PETALING JAYA: The Malaysian capital market is expected to remain robust this year as companies seek to raise capital and expand their businesses as economic activities pick up.
Maybank Investment Bank (Maybank IB) head of capital markets, Sarina Dalik, told StarBiz that a total of RM89.9 billion in corporate bonds will mature in 2022.
“We expect bond issuers to continue to favor the bond market due to the ample liquidity available and the relatively low interest rate environment. The supply of infrastructure bonds should remain strong due to ongoing investments in the rail, water and renewable energy sectors.
“This may also include National Digital Infrastructure Plan funding requirements to provide wider coverage, better broadband quality and 5G infrastructure readiness for the country.
“Some companies with loan maturities may also seek to tap into the bond market for the first time due to the abundance of available cash and to secure lower long-term funding rates,” she added.
On equity capital markets (ECM), head of investment banking and advisory Kevin Davies said he expects the ECM to remain active during the year as clients actively seek expansion opportunities in the equity market to raise capital.
He said initial public offerings (IPOs) in the country raised a total of RM2.59 billion in 2021, a 30% increase from 2020 and expects this momentum to continue as market confidence grows. Investors remain strong, citing Farm Fresh’s recent IPO which was oversubscribed. .
“We have several IPOs underway in sectors such as technology, media and telecommunications, consumer and retail, real estate and hospitality, as well as general industries that will come to market in the over the next 12 to 24 months, if market conditions remain favourable,” he noted.
On the M&A and advisory front, he expects more opportunity from government-linked investment company restructuring activity, private equity buy-and-sell deals and consolidation. in the country.
He said it shows in recent transactions, such as exiting non-core businesses to streamline core businesses and portfolio (e.g. Ancom Bhd taking over the assets and liabilities of Nylex Bhd) and raising capital competitively to fund business growth (e.g. Sunway Healthcare sells a 16% stake to GIC Pte Ltd of Singapore).
Meanwhile, Maybank IB expects market conditions to improve alongside economic demands and is optimistic that investment banking business will remain robust for the remainder of 2022 as economic activities return. gradually to pre-pandemic levels.
The investment bank said that while the overall value of the country’s investment banking and advisory operations fell by 49.6% from $16.55 billion (RM70 billion) to 8.33 billion (RM35 billion) year-over-year (year-on-year) for the first quarter of 2022, ECM activity increased. slightly YoY by 4.1% from US$675.1 million (RM2.8 billion) to US$703.9 million (RM3 billion) for the period.
On another note, with sustainability being a strategic priority under Maybank’s five-year M25 plan, the investment banking arm is also building capacity to meet the group’s sustainability commitments as well as market demand for instruments green, social, sustainable and linked to sustainability. .
To this end, Sarina said, among other things, that Maybank IB set up a dedicated sustainable finance team in October 2021 to guide clients through the end-to-end sustainable finance process.
The team would also help issuers select second opinion providers and external reviewers, and coordinate and liaise with those parties to obtain certifications, audits and reviews, she said.
She noted that the move has further strengthened the position of Maybank IB, with the bank ranking No. 1 in Dealogic’s debt and loan market rankings for Malaysia since the start of the year in March 2022.
Davies highlighted the importance of embracing environmental, social and governance (ESG) in Maybank IB’s operations.
“ESG is an integral part of Maybank’s DNA, as part of our mission to humanize financial services. This means being accountable to our stakeholders, which includes our employees and the community.
“In order to serve our customers well, we must ensure the safety and well-being of our employees, providing an inclusive workplace and prioritizing their development,” he added.