Malaysian M&A activity has bursted its loan volume in the event-driving financings. The prospect for this M&A activity could reach over $2bn. However, some international banks might miss out on most of the action. Those who are spearheading the potential deal flow are IHH Healthcare and telecom group Axiata. Active lenders who closely watch their activities since the pandemic welcome their deals.
More local and international banks were involved in IHH Healthcare during the firm’s due diligence for Ramsay Sime Darby Healthcare acquisition. This acquisition would be $1.3bn which is 100%. Moreover, Edotco Group, Axiata subsidiary, purchased 2.973 telecom towers from Philippine telecommunications company PLDT for as much as Ps42bn. Then, Axiata subsidiaries from Indonesia have also acquired 66.03% Link Net for as much as Rp.8.72trn.
A Singapore-based loans banker analyzed that it was actually the largest M&A transaction from Malaysian companies. They are highly confident that they could surely give loans prospects. There is also more volume going to come for non-organic business growth. Surprisingly, domestic banks in Malaysia are better than their international peers, especially in terms of M&A financing key roles. This is because they could provide competitive terms inside their local currency loans.
One banker even added that the IHH financing package could facilitate a combination between ringgit and Singapore dollars. This is because the company generates cash flows from these currencies. They could see that U.S. dollar borrowing now is subject to volatility especially in the exchange rates. The banker argued that IHH could leverage their ringgit to avoid exchange rate risks. Axiata on the other hand has delivered a request for the acquisition of Link Net for as much as $1.25bn. The loan comprises ringgit and the U.S. dollar portion.