The investment bank will focus on enhancing its clients' shareholder value rather than generating volume or dominating market share, says its group managing director
MIDF Amanah Investment Bank Bhd (MIDF Investment), the main contributor to Malaysian Industrial Development Finance Bhd's (MIDF) profit, aims to be a niche and profitable investment bank that focuses on delivering quality results rather than quantity.
"I guess this approach is uncharacteristic of investment bankers, but it is about sustainability of the business," MIDF group managing director Mohd Najib Abdullah told Business Times in an interview.
"In other words, we are focused on enhancing our clients' shareholder value rather than generating volume or dominating market share or chasing league table positions," he added.
Given the current market conditions, the investment banking division has taken on a more conservative approach with a strong discipline on risk management.
"We need to have a sustainable business proposition for our franchise," Mohd Najib said, adding that going forward, MIDF Investment wants to forge smart partnerships and alliances with other market players.
He also anticipates increased contribution from non-debt capital market related businesses such as stockbroking and corporate advisory activities.
MIDF Investment commenced operations early 2007 and in the first full year of operation, it posted a pre-tax profit of RM86.4 million while for the first six months of the current financial year ending December 2008, the pre-tax profit was RM65.4 million.
"Thus, the momentum is continuing in transforming the division into a highly profitable boutique investment bank," said Mohd Najib.
He said the investment banking division expects an enhanced involvement in the debt and equity capital markets with the full array of investment banking related activities from a stronger platform.
The activities include financial advisory, underwriting of equities and debt instruments, treasury activities and equity-broking services.
Mohd Najib said MIDF Investment is also pursuing several high value Islamic securities mandates, having secured such mandates valued at over RM1.2 billion.
"The remainder of the year will be challenging as investors' risk appetite has shifted up the rating curve," he said, adding that investors are expected to remain cautious in their investment decisions.
He also said that the debt capital market business will also be highly competitive with investment banks competing for the same pool of issuers and distributing the bonds to a smaller pool of investors.