“We felt the timing was ripe for us to return
to the market”
EXPORT-IMPORT BANK OF KOREA CHAIRMAN AND PRESIDENT SUNG-SOO EUN, P15
Indonesia launches infra fund
Indonesia has launched a state-owned
infrastructure investment fund in a bid to drive
more of the country’s savings into long-term
projects and deepen the local capital markets.
BANDHA INVESTASI INDONESIA, a joint venture
between investment bank Bahana
Pembinaan Usaha, brokerage Danareksa and
OTHERûSTATE
OWNEDûlNANCIALûlRMS ûISû
expected to invest in debt and equity issues
from state-owned infrastructure developers,
and also make direct investments in toll
roads and power plant projects.
“The availability of infrastructure fund and
CAPITALûMARKETûlNANCINGûWILLûPROVIDEûAûLONGER
TERMûlNANCINGûHORIZONûCOMPAREDûTOû
CONVENTIONALûBANKûlNANCING vûSAIDû!LDIANû
Taloputra, an economist at Standard Chartered.
h7EûTHINKûTHEûALTERNATIVEûlNANCINGû
scheme that involves foreign investment
participation has to be encouraged, given
the relatively limited domestic savings.”
Indonesia has ambitious plans to develop
infrastructure, increase connectivity
between regions and reduce logistics costs.
It aims to build power plants to increase its
ELECTRIlCATIONûRATIOûTOûûANDûINSTALLû
capacity of 71,000 megawatts. It wants to
DEVELOPûlVEûMAJORûPORTS ûûLARGEûAIRPORTSû
and build 1,800km of toll roads under its
medium-term development programme.
But government and quasi-government
AGENCIESûCANûONLYûlNANCEûAROUNDûAûTHIRDûOFû
THEû53BNûSPENDINGûPLANûOVERûTHEûNEXTû
lVEûYEARS ûACCORDINGûTOûANALYSTS
Bandha Investasi aims to bridge the
funding gap with potential investors from
both the public and private sectors,
according to a presentation by Bahana.FUNDING GAP
In recent years, Indonesia’s GDP growth
has remained around the 5% level and it has
coincided with the slowdown in investment
growth. “Fixed investment will need to be
ramped up for overall GDP growth to break free
from the narrow range around 5%,” said Eugenia
Victorino, economist for Asia at ANZ Research.
The infrastructure fund will start life with
entirely state-owned shareholders, with the
aim to eventually open it up to the private
sector and then foreign investors.
Besides Bahana and Danareksa, state-
owned insurance, pension funds and credit
lRMSûSUCHûASû!SURANSIû*ASINDO û!SABRI û*ASAû
Raharja, Askrindo Insurance, Taspen and
Jamkrindo will also hold stakes.
The stakeholders are each expected to
contribute Rp30bn–Rp40bn initially, with a
target of building the total investment to
53BNû2PTRNn2PTRN ûBYû ûSAIDû!DIû
3APUTRA ûPORTFOLIOûMANAGERûFORûlXEDûINCOMEû
at Sucor Asset Management.
Saputra said there was idle money in the
country sitting in insurance and investment
companies, which can be channelled
THROUGHûTHEûNEWûINVESTMENTûlRM)TûISûNOTûTHEûlRSTûTIMEû)NDONESIAûHASû
nudged SOEs to invest in infrastructure. Last
year, it supported sovereign-owned issuers
such as Jasa Marga in their efforts to raise
Komodo, or offshore rupiah, bonds.NEW AVENUES
Two years ago, the market regulator
introduced mandatory bond holdings for
insurance and pension funds to buttress
onshore demand for rupiah bonds. Indonesia
has also embraced new instruments such as
Green bonds, project bonds, perpetual bonds
and asset-backed securities to raise capital for
infrastructure spending.
“By investing in toll road projects of SOEs
like Jasa Marga, the companies can get fresh
money, reinvest in other projects and fast-
track infrastructure development,” said
Saputra from Sucor AMC.
However, it is too early to say if Bandha
Investasi will be able to attract private and
foreign participation, or grow into one of
South-East Asia’s major sovereign wealth
funds alongside Malaysia’s Khazanah
Nasional and Singapore’s Temasek Holdings.
h4HEûSTATE
OWNEDûINVESTMENTûlRMûISûSTILLûAû
new concept. We are not yet sure about the
legal framework, investor protection,
technical details and what products will be
launched or which instruments they will
invest in,” said Saputra.
Krishna MerchantGlobal banks set pace in Asian IB fees
Global banks clung on to their share of Asia
INVESTMENTûBANKINGûREVENUESûINûTHEûlRSTû
half of 2017 after the worst second quarter
in four years for overall fees.
International banks took seven of the top 10
POSITIONSûINûTERMSûOFûFEESûEARNEDûINû!SIA
0ACIlCû
ex-Japan during the six months to end-June,
UNCHANGEDûFROMûTHISûYEARSûlRSTûQUARTERûANDûUPû
FROMûlVEûINûTHEûlRSTûHALFûOFûLASTûYEAR
GOLDMAN SACHS and CREDIT SUISSE were
among the biggest risers from a year ago,
MOVINGûUPûNINEûPLACESûTOûTHIRDûANDûlVEû
PLACESûTOûlFTH ûRESPECTIVELYû4HEREûWEREûALSOû
gains for UBS, MORGAN STANLEY and JP MORGAN.
BANK OF CHINA retained its top position,
GENERATINGû53MûINûFEESûFORûAûû
market share, according to Thomson
Reuters data, which counts fees earned from
debt and equity underwriting, syndicated
loans and mergers and acquisitions.
CITIC SECURITIES was second with a 4.3%
share of the wallet, ahead of Goldman Sachs
with a 3.6% market share.
4HEûLATESTûlGURESûWILLûCOMEûASû
welcome news to international banks,
which have seen Chinese banks and
brokers eat into their market share in the
last two years.
Global banks regained ground during Q1
as a surge in complex equity placements and
new economy-related deals tilted the scales
back in their favour.
Growing tensions between China and the
US, a liquidity squeeze in China and waning
investor sentiment towards emerging
markets resulted in a tougher Q2.
Overall IB fees fell 21% year on year to
53BN ûTHEûWORSTû1ûSINCEûû)NûCONTRAST û
TOTALû)"ûFEESûROSEûûDURINGû1ûTOû53BN
h)TSûDElNITELYûBEENûAûTALEûOFûTWOûHALVESûDURINGû
THEûlRSTûSIXûMONTHS vûSAIDû$AVIDû#HIN ûHEADûOFû
corporate client solutions for APAC at UBS.
h4HEûlRSTûTHREEûMONTHSûWEREûVERYûACTIVE û
particularly for ECM, where we saw anumber of large blocks and CBs. The whole
macroeconomic and geopolitical
environment then became more volatile
during the last few months, which, coupled
with the liquidity squeeze, had a knock-on
effect on the deal pipeline.”
/VERALLû%#-ûFEESûDIPPEDûûTOû53BN û
although global banks fared better than their
Chinese counterparts. International banks
took six out of the top 10 positions in the
%#-ûFEEûLEAGUEûTABLESûFORûTHEûlRSTûHALF û
whereas last year only Citigroup ranked
inside the top 10.
'LOBALûBANKSûBENElTEDûFROMûANûUPSURGEû
in follow-on offerings and equity-linked
deals, two areas where Chinese banks have
so far struggled to gain much traction.
“In order to be effective in doing blocks or
converts, it really requires a broad distribution
platform and product expertise,” said Johnson
Chui, head of APAC ECM at Credit Suisse.
Thomas Blott