ASEAN M&A Markets Trends and Implications

29 October 2014

Francois Cohas

Managing Director, Head of Corporate Finance, North & South Asia

1

ASEAN is one of the largest and most dynamic economic zone in the world

Population 2013 millions

GDP 2013, current prices USD trillion

Real GDP growth, 2000–13 %

Debt to GDP, 2013 %

Inflation rate, 2013 %, GDP deflator

China 1,361 U.S.A. 16.8 China 10.0 Japan 243 India 7.0

India 1,239 China 9.3 India 7.0 Italy 133 Russia 6.5

ASEAN 624 Japan 4.9 ASEAN 5.1 U.S.A. 105 Brazil 6.5

U.S.A. 317 Germany 3.6 Russia 4.4 France 94 ASEAN 2.8

Brazil 200 France 2.7 Brazil 3.2 U.K. 90 Germany 2.3

Russia 141 U.K. 2.5 Canada 1.9 Canada 89 U.K. 2.1

Japan 127 ASEAN 2.4 U.S.A. 1.8 Germany 78 China 1.7

Germany 82 Brazil 2.2 U.K. 1.5 India 67 U.S.A. 1.5

U.K. 64 Russia 2.1 Germany 1.1 Brazil 66 Canada 1.5

France 64 Italy 2.1 France 1.0 ASEAN 47 Italy 1.4

Italy 61 India 1.9 Japan 0.8 China 22 France 1.1

Canada 35 Canada 1.8 Italy 0.0 Russia 13 Japan -0.6

Source: IHS, International Monetary Fund, World Economic Outlook, McKinsey Global Institute analysis

2

ASEAN is a strategically important market for MNCs

Economic powerhouse

- USD2.4 trillion GDP (2013)

Home to many globally competitive companies

- More than 220 companies with 2010 revenues > USD1bn headquartered in ASEAN

- USD2.3 trillion public equity market capitalization

Fast growing center of consumer demand

- Consumer households with income greater than USD7,500: 67m (2010) 125m (2025)

Strategically positioned to capitalize on global trade flows

- World’s 4th largest exporter

Significant growth potential for intra-ASEAN trade

- Deepening integration and trade liberalization

3

ASEAN is home to many globally competitive corporates across a wide range of industries

Country Financials Industrials & Real Estate

Consumer, Retail & Healthcare

Energy & Resources

TMT Other

Singapore

Malaysia

Indonesia

Thailand

4

Public equity market capitalizations are expected to rise significantly across ASEAN

USD trillion January 2014 2030E

Indonesia 0.4 4.3

Singapore 0.7 3.2

Malaysia 0.5 2.4

Thailand 0.4 2.4

Philippines 0.2 1.2

Vietnam 0.1 NA

Total 2.3 13.5

Source: Thomson Reuters, broker research

5

39

50

22 23

36

45

81

110

75

57

89 84

106

97 91

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20132014YTD

M&A increasingly central to corporate strategy Annual deal activity in ASEAN near all-time highs

ASEAN Announced M&A (USD’b)

APAC (USD'bn) 336 226 168 213 296 455 589 709 570 485 651 676 633 665 586

ASEAN % of APAC 11.6% 22.1% 13.0% 10.6% 12.3% 9.8% 13.8% 15.5% 13.1% 11.7% 13.6% 12.4% 16.8% 14.6% 15.5%

c.5x

Source: Dealogic. Note: (1) “2014YTD” refers to 1 Jan 2014 to 21 Oct 2014; and (2) “2013 pcp” refers to the prior corresponding period from 1 Jan 2013 to 21 Oct 2013

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13

pcp

2:

82

1

6

Composition of ASEAN M&A flows While M&A activity remains dominated by domestic and outbound transactions, inbound M&A reached USD50bn since 1 Jan 2012

Announced ASEAN M&A Activity (USD’b)

0

20

40

60

80

100

120

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

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YTD

Domestic

Outbound: ASEAN → Non APAC

Intra ASEAN Inbound: APAC (non-ASEAN) → ASEAN

Outbound: ASEAN → APAC (non-ASEAN)

Inbound: Non APAC → ASEAN

Source: Dealogic. Note: “2014YTD” refers to 1 Jan 2014 to 21 Oct 2014

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Composition of ASEAN M&A flows

USD’b

Singapore 73.3

Malaysia 42.2

Philippines 16.2

Thailand 14.4

Indonesia 12.1

USD’b

Japan 11.5

China 7.8

U.S.A. 3.0

Australia 1.8

Hong Kong 0.8

ASEAN inbound M&A

USD’b

Hong Kong 11.3

Australia 9.0

U.K. 7.9

China 6.6

U.S.A. 4.8

ASEAN outbound M&A

Top acquirer ASEAN markets

Vietnam Philippines

Singapore

Malaysia

Myanmar

Indonesia

Brunei

Cambodia

Laos

Thailand

Source: Dealogic

Note: The analysis is based on announced M&A transactions for the period between 1 Jan 2013 and 21 Oct 2014

USD’b

Malaysia 36.3

Singapore 35.7

Thailand 20.4

Indonesia 18.4

Philippines 15.4

Top target ASEAN markets

8

Top 15 ASEAN M&A transactions (2013-14YTD)

Acquirer Target Sector Value

(USD’b)

1. CIMB Group (MY) RHB Capital (MY) Financial 7.6

2. CP All (TH) Siam Makro (TH) Retail 6.5

3. Temasek (SG) AS Watson Hldgs (25%) (HK) Retail 5.7

4. Mitsubishi UFJ (JP) Bank of Ayudhya (72%) (TH) Financial 5.5

5. OCBC (SG) Wing Hang Bank (HK) Financial 5.0

6. SM Prime Hldgs (PH) SM Land (63%) (PH) Real Estate 4.6

7. Existing shareholders (SG) Frasers Centrepoint (SG) Real Estate 4.1

8. Frasers Centrepoint (SG) Australand Property (AU) Real Estate 3.5

9. GIC (SG) UK assets – Broadgate Office (UK) Real Estate 2.8

10. CapitaLand (SG) CapitaMalls Asia (35%) (SG) Real Estate 2.5

11. CIMB Group (MY) Malaysia Building Society (MY) Financial 2.4

12. Petronas (MY) Azerbaijan Oil & Gas Assets (AZ) E&R 2.3

13. Existing shareholders (MY) IOI Properties (MY) Real Estate 2.3

14. PT Pertamina (ID) Oil & Gas Assets (MY) E&R 2.0

15. Sime Darby (MY) New Britain Palm Oil (PG) E&R 2.0

Source: Dealogic. Note: The analysis is based on announced M&A transactions for the period between 1 Jan 2013 and 21 Oct 2014 where either the acquirer or target company is based within the ASEAN region

9

Top inbound M&A by non-ASEAN acquirers (2012-14YTD)

USD’b

Heineken Asia Pacific Breweries 6.4

Bohai Leasing SeaCo 1.3

Consortium St James Hldgs 1.1

Barry Callebaut Petra Foods 1.0

Black & Decker Infastech 0.9

Singapore

USD’b

AIA ING Malaysia 1.7

Prosperity Int’l Phoenix Lake 0.5

Asahi Etika Int’l Hldgs 0.3

AEON Carrefour 0.3

Japan Tobacco JT Int’l 0.3

USD’b

MUFJ Bank of Ayudhya 5.5

China Mobile True Corp 0.9

Meiji Yasuda Life Thai Life 0.7

Prudential Thanachart Life 0.6

ACE Samaggi Insurance 0.2

USD’b

Sumitomo PT Bank Tabungan 1.6

CIC Coal assets 1.2

Nippon Life Jiwa Sequis Life 0.4

Sumitomo BNI Life Insurance 0.4

Dai-ichi Life PT Panin Life 0.3

USD’b

Fomento Coca Cola Bottlers 0.7

FrieslandCampina Alaska Milk 0.5

Cathay Financial Rizal Banking 0.4

Marubeni Maynilad Water 0.4

Capital Group Container Srvs. 0.3

Malaysia Thailand

Indonesia Philippines

10

ASEAN deal flow by sector (2013-14YTD)

Announced ASEAN M&A by sector

Consumer USD18.6bn (9.9%)

Retail USD13.7bn (7.3%)

Healthcare USD2.7bn (1.4%)

Telecom & technology

USD13.0bn (6.9%)

Industrials USD13.2bn (7.0%)

Financials USD34.0bn (18.1%)

Real Estate USD58.9bn (31.3%)

Energy, Power & Resources

USD33.6bn (17.9%)

Other USD0.3bn (0.2%)

Acquirer Target Value

(USD’bn)

Real Estate

SM Prime Holdings SM Land (63%) 4.6

Existing shareholders Frasers Centrepoint 4.1

Frasers Centrepoint Australand Property 3.5

Financial

CIMB Group RHB Capital 7.6

Mitsubishi UFJ Bank of Ayudhya 5.5

OCBC Wing Hang Bank 5.0

Energy, Power & Resources

Petronas Azerbaijan O&G assets 2.3

PT Pertamina Malaysian O&G assets 2.0

JG Summit Hldgs Manila Electric (27%) 1.7

Consumer

Sime Darby New Britain Palm Oil 2.0

Del Monte Pacific Del Monte Foods 1.7

Wilmar & First Pacific Goodman Fielder (89.9%) 1.6

Source: Dealogic. Note: The analysis is based on announced M&A transactions for the period between 1 Jan 2013 and 21 Oct 2014 where either the acquirer or target company is based within the ASEAN region

11

Selected drivers of M&A activity in ASEAN markets

Domestic and regional consolidation

- Emergence of local/regional players with scale to capture opportunities and compete effectively

Inbound investments to gain a foothold in large, fast-growing ASEAN markets

- Access to established brands, distribution networks, critical mass

Portfolio rationalization by global players / MNCs

- Divestments by weaker players; exits from markets where competitive position is weak

Access to upstream resources

- Control over supply; vertical integration

Increasing role played by financial investors

- SWFs, PE funds

12

Illustrative M&A trends and transactions by sector

Financial services

Domestic consolidation

Access to growth markets by institutions in mature economies

Creation of regional champions

Portfolio rationalization from retrenching Western players

CIMB/RHB/MBSB merger

MUFJ – Bank of Ayudhya, SMFG – BTPN, Prudential plc – Thanachart Life

OCBC – Wing Hang Bank

AIA – ING Malaysia

Energy & Resources

Population growth and urbanization to drive consumption (metals, energy, petrochemicals, power and infrastructure)

Continued demand for upstream assets

Emergence of new ASEAN acquirers

ASEAN 3: Indonesia, Philippines and Vietnam

Indonesian and Malaysian resources

Not only China

Selected trends: Examples:

Monetization and rationalization of telco/fiber optic infrastructure assets

STP acquisition of Axiata's tower portfolio; PE investments; regional tower companies

TMT / Renewables

13

Illustrative M&A trends and transactions by sector

Consumer & Retail

Domestic and regional consolidation

Access to local brands, distribution networks and fast growing customer demand

Global food retailers rationalizing portfolios

CP All – Siam Makro, Thai Beverage – F&N

Heineken – Asia Pacific Breweries

Aeon – Carrefour Malaysia

Financial investors

SWFs: Temasek, GIC, Khazanah, etc.

PE Funds: Blackstone, Carlyle, KKR, etc

Active acquirers & sellers; Vast portfolio of companies; Potential partners to corporates

AUM (USD, bn): Temasek (170+), Khazanah (40+), KKR Asia II Fund (6)

Temasek: SGD24b acquisitions & SGD10bn divestments last year

Temasek – AS Watson, GIC – Broadgate Office (UK), Khazanah – MAS, KKR – Goodpack

Agriculture Consolidation and vertical integration

Cash rich players expanding product portfolios

Cofco/Hopu – Noble Agri

Sime Darby – New Britain Palm Oil

Selected trends: Examples:

14

Implications for Taiwanese corporates

Successful market entry requires an appreciation of local market practices and access to key stakeholders

CIMB Group is uniquely positioned to assist Taiwanese corporates in implementing their ASEAN strategy

Economic powerhouse

Increasingly competitive outsourcing and production base

Hub of consumer demand

Emergence of globally competitive corporates: friends or foes?

A strategically important market that can’t be ignored …

Establish localized production

Achieve access to fast growing consumer markets

Secure supply over resources (agri, mining, etc.)

Reduce reliance on domestic market and China

Extend scale across Asia / develop regional leadership

… Creating opportunities for investments, partnerships and M&A …

… But ASEAN is not a monolithic market

Economies at different stages of economic development

Diverse environment: political, regulatory, currencies, culture, language, religion, etc.

Regional integration still in developing stage

15

CIMB – leading ASEAN investment bank

Leading ASEAN bank

Over 40,000 staff

13m customers

1,057 branches

Reaching 83% of ASEAN population

Global presence

ASEAN

HK / China & Taiwan

South Korea

Australia

India / Sri Lanka

UK / USA

Financial scale

Assets: USD120bn

Market cap: USD16bn

Total shareholder return (1 Jan 2009 - 1 Jan 2014): +200%

Financial strength

FY13 NPAT USD1.4bn (5yr CAGR of 13%)

Core Tier 1 ratio 11.1%

CIMB Bank: A3 (Moody's)

Key shareholders

Khazanah

Employees Provident Fund

Bank of Tokyo-Mitsubishi

Offices:

Australia

Bahrain

Brunei

Cambodia

China

Hong Kong

India

Indonesia

Laos

Malaysia

Myanmar

Philippines

Singapore

South Korea

Sri Lanka

Taiwan

Thailand

UK

USA

Vietnam

Cambodia 3k customers

Thailand 2.2m customers

Malaysia 7.8m customers

Singapore 277k customers

Indonesia 4.2m customers

Brunei CIMB Investment Bank branch

Philippines 350k customers

Myanmar Representative office in Yangon

Laos Banking license pending

Vietnam CIMB Securities JV with Vinashin

Banking license pending

Best investment bank in Malaysia for 2013

Southeast Asia M&A Deal of the Year – AIA Acquisition of ING Group Malaysian Insurance Business (2013)

16

Important notice

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