Kenanga Investment Bank to focus on foreign deals

Kenanga Investment Bank to focus on foreign deals
By Chong Pooi Koon
pooikoon@nstp.com.my


May 1 2007


KENANGA Investment Bank Bhd, which recently won approval for the investment bank (IB) status, will focus on winning more corporate deals outside Malaysia instead of facing the stiff competition of too many players at home.

"Yes, there are quite a few IBs now, so we will look outside Malaysia. We don't want to be a jaguh kampung," chief executive officer (CEO) Tunku Afwida Malek told reporters after a K&N Kenanga Holdings Bhd's shareholder meeting in Kuala Lumpur yesterday.

"The clients are moving overseas to Pakistan, Indonesia, China and others and we want to move with them," she said.

In order to do that, deputy CEO Lee Kok Khee said the bank has formed joint ventures in Dubai, Saudi Arabia and Sri Lanka to establish direct presence in key markets where deal flows are strong.

"We have strong local partners and we believe companies will want to work with IBs who have direct presence there and know the market better," Lee said. The bank's overseas ventures are expected to start contributing to earnings from financial year 2008 onwards, he added.

Kenanga is also exploring opportunities to form similar alliances in South-East Asia, another hotspot for corporate deals.

About 17 IBs are due to emerge in Malaysia under the new framework this year where merchant banks, stockbroking companies, universal brokers and even discount houses transformed themselves into IBs.

"There are definitely too many IBs and most are already looking abroad. But personally, I don't think we need to consolidate. Unlike commercial banking, an IB won't need to buy another IB to build scales, so consolidation is quite difficult to happen," said Tunku Afwida.

As a smaller player which may not have sufficient balance sheet to undertake larger deals alone, she said Kenanga sees opportunities in smaller jobs both in Malaysia and abroad. It may participate in bigger deals as part of a consortium, she added.

Shareholders of its holding company yesterday approved a plan to sell and leaseback a 22-storey building in Kuala Lumpur, currently operated as the office of Kenanga International, for RM165 million.

The bulk of the proceeds will be used to top up capital of Kenanga Investment Bank, in order to meet the RM500 million minimum capital requirement set by Bank Negara Malaysia. After the exercise, Kenanga Investment Bank will have RM580 million in capital.