Great potential for sustainability financing in Asean: Maybank IB

KUALA LUMPUR: There is great potential for sustainability financing in Asean, including Malaysia, as many companies are catching up and transforming themselves to become more green, diverse and inclusive, or risk being sidelined by customers and investors, according to Maybank Investment Bank (Maybank IB).

CEO Datuk Fad’l Mohamed (pix) said investor appetite for sustainable investments is strong globally, particularly in emerging markets with relatively weak supply, such as the Asean bond market.

“The share of green, social and sustainability bonds in the Asean bond market is less than 5% of the entire Asean bond market. In Malaysia, sustainable issuances made up about 7.6% of total issuances in 2021,” he said at the Invest Asean 2022 press conference today.

Fad’l said Maybank Investment Bank is looking at landing RM110 billion deals from the bond market in 2022 alongside economic recovery as the environment is conducive for capital raising in addition to high liquidity for assets.

He said the pipeline is strong and companies are building up sustainability agenda and net-zero objectives, which means there are opportunities for the bank to support the companies in the restructuring and transitioning, and providing advisory services in terms of sustainable issuance of financing.

“In the debt capital market for the second half of 2022, we have a potential pipeline of about RM6.8 billion coming up and potential ESG alone is about over RM6 billion. We have completed about 33 issuances totalling to about RM6.3 billion, of which one of them was TNB. Sukuk issuance, which was done recently, of which sustainability issuance alone is about RM2.1 billion,” he added.

Maybank Investment Banking Group (Maybank IBG) CEO Datuk Ami Moris added that the region has many old-world economy companies that are catching up and transforming to become more green, diverse and inclusive, or risk being side-lined by customers and investors.

“Decarbonisation and transitioning to renewable energy will likely require significant capital injection and radical changes in business models, notably for companies in the hard-to-abate sectors,” she said.

Additionally, Fad’l said there is a lot of interest in the equity capital market (ECM) both inbound and outbound, towards Malaysia’s assets.

“On the ECM side, year to date, there were about nine IPO. We are also involved in the Farm Fresh issuance. Going forward in the second half of the year, we’ve seen a total deal value of about RM3 billion on the ECM in sectors like consumer, retail, general industrial, and logistics.

“There’s a lot of gunpowder from the private equity side. There are a lot of activities happening and now with markets reopening, and we’re seeing a lot of investors coming into the market looking at opportunities and meeting up with companies.”

A research by Maybank IBG has indicated that companies with higher ESG ratings in Asean-6 countries (Malaysia, Singapore, Thailand, Indonesia, the Philippines, and Vietnam) had outperformed the MSCI All Country Asean Index.