Kinobi x NUS Investment Banking Club Webinar

Kinobi Team

Kinobi was invited to share on the topic of “Investment Banking in Southeast Asia during Covid-19” recently last Friday at NUS Investment Banking Club (IBC) Welcome Virtual Tea Session.

Slides for Investment Banking in Southeast Asia during Covid-19

Benjamin Wong, CEO & Co-founder of Kinobi, shared a summary of how Investment Banking (IB) has been impacted during this Covid-19, with an overview of the macro market here in Southeast Asia (SEA).

1. SEA M&A transactions slowed down by 12.5% y-o-y to US$29bn in H1 2020
  • Similar to US and Global Mergers & Acquisition (M&A) deals, SEA M&A closed deals are also down
  • M&A closed deal flow was down 12.5% y-o-y to US$29bn in H1 2020 across 149 deals
  • Singapore remained the largest M&A market, with ~US$12bn deals done
  • Largest deals in H1 2020:
    • CP Group US$10.6bn deal for Tesco TH and MY (Thailand)
    • CapitaLand Mall Trust (SG based REIT) merger with CapitaLand Commercial Trust for US$8bn (Singapore)
  • The top 5 IB banks in SEA by revenue – CS, DBS, UBS, HSBC, JPM (not only M&A, but also ECM and DCM, etc.)
  • The top 5 IB banks in MY and SG by revenue – DBS, CS, UOB, HSBC, OCBC (not only M&A, but also ECM and DCM, etc.)
2. Fall in closed deals is mainly due to mismatch in pricing
  • Reason for fall in closed deals is due to
    • 1) Mismatch in pricing between buyers and sellers – buyers find it too expensive; sellers find it too cheap
    • 2) Lack of financing (senior loans mainly) especially in India with non-banking financial companies (NBFCs) balance sheet impacted
  • In Private Equity, ~2/3 of deals were re-negotiated and delayed due to pricing concerns
3. Sectors with digital strategies or impacted by digital push are favoured and continue to increase in value
  • Slicing and dicing by sectors, we find that those strategies which are impacted by the digital push are favoured
    • Healthcare – telemedicine (can’t go out of the house; buy medicine online and deliver through last mile logistics)
    • Education – edtech and re-skilling, as more face unemployment and desire to re-skill (Duolingo, Skillshare, etc.)
    • Industrials
      • E-commerce, delivery (as consumers can’t purchase at retail, and get comfortable purchasing online and delivered to their doorstep; e.g. Grabfood, Shopee, Taobao)
      • Data centers, data (rise in gaming and use of social media due to increase in disposable time without the need to travel – rise of data center real estate strategies and cap rate compressions)
  • However, some sectors are also negatively impacted – retail & hospitality (as more purchase online); and also brands that don’t have digital strategies or social media presence to build strong branding
4. The loss of revenue and downward pressure on valuation multiples explains the buyers giving low-ball offers and deals not closing
  • We explore the mismatch in pricing – which is the reason why some buyers would give low-ball offers
    • 1) Loss of revenue for ~3-6 months means a loss of 25%-50% of annual revenue. This translates to even lower annual EBITDA (unless they layoff workers to reduce OPEX)
    • 2) Downward pressure on multiples (EV/EBITDA etc.)
  • Thus, we have to understand the concept of market valuation:
    • Enterprise Value (EV) = Revenue * EV/Revenue, or
  • With 1) Lower EBITDA and 2) Lower EV/EBITDA, this leads to a lower EV (valuation) as a whole
  • Thus, this explains the low-ball offers given by many buyers. However, sellers are unwilling to sell at this because they believe that the market may bounce back in the next year, and are just minimising cash burn or injecting new capital to wait this out

2 scholarships for our Kinobi platform offered to NUS students!

Speak to our Kinobi representative to see how we can help you find out your dream career.

What do our scholarships include?

  1. Full sponsorship of our standard program for our Kinobi Pathways
  2. One free monthly mentor clinic session

1. How can Kinobi help you?

  • What Gen Z cares about is finding a job that fits their aspirations
  • Kinobi equips students with the tools, skill and networks for their dream careers

2. Why Kinobi?

3. Access to Mentor Marketplace

  • Cross-cultural perspective – which is important in Asia
  • 6 countries: Singapore, Indonesia, India, Thailand, Philippines, Australia
  • 4 pathways: Investment Banking, Management Consulting, Venture Capital, Business Technology
Speak to our Kinobi representative to see how we can help you find out your dream career.

Please direct any questions to if you have questions 🙂

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