CIMB upbeat on corporate fees
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SET boom to swell revenue by 50 per cent this year
CIMB Thai Bank expects its fee income growth from the corporate finance business to exceed 50 per cent thanks to the buoyant equity market.
Sittichai Mahaguna, executive vice president for corporate finance, said he is optimistic that the market segment would rebound from its current slowdown in the second half of the year and the SET could reach 1,800 points.
He said the bank’s active mandates so far this year have reached Bt30 billion, beating last year’s record of Bt26.7 billion.
Deals managed by CIMB Thai’s corporate finance group are initial public offerings (IPOs), launches of property funds and mergers and acquisitions (M&A).
CIMB Thai is working on four IPOs worth Bt7.5 billion, four property fund IPOs worth Bt15 billion and six M&A deals worth Bt7 billion. The projects are all expected to be completed this year.
The M&A deals are in the real estate, food and beverage, auto, logistics, paper and healthcare industries.
References from the group’s assignments last year have prompted corporations, both listed and non-listed, to seek assistance from the bank in doing structured deals.
Among the big IPO deals last year, CIMB Thai was the joint lead underwriter for Asia Aviation, the holding company for Thai AirAsia, and Ananda Development, a residential developer.
Even though CIMB Thai is a small bank, CIMB’s regional network and recent acquisition of Royal Bank of Scotland’s investment banking operation strengthens the corporate finance group’s ability to ensure smooth fund-raising through the equity market.
A good relationship with institutional investors in Asia-Pacific and a research team have helped spotlight CIMB Thai’s deals.
Deals are larger this year after customers saw that the equity market can help drive up their company’s valuation.
“Customers now are not only thinking about loans, but are also going another step to build up valuations through the equity market,” he said.
Company and property fund IPOs will still have an important role in generating fee income this year especially because property funds will end and will be replaced by real estate investment trusts (REITs).
Property funds are also getting bigger. The average size is now Bt3 billion, up from Bt1 billion in the past two years.
REITs will become the main product of the corporate finance group next year.
Capital-raising through the equity market, especially IPOs, is interesting based on the forecast of the stock index at 1,800 points with a price-to-earnings ratio of 14 times and expected earnings growth of 23-25 per cent for listed companies, he added.
