The Crucial Role of Investment Banking
An interview with Arul Kandasamy, Head of Investment Banking, Abu Dhabi Commercial Bank
Abu Dhabi Commercial Bank (ADCB) offers comprehensive investment banking capabilities to customers in UAE and the wider GCC, with substantial growth too in India where the bank has two branches. It is perhaps surprising, therefore, that its investment banking division is relatively new, yet still plays such a crucial role in the investment banking community in the region. In this interview, Helen Sanders, Editor, talks to Arul Kandasamy, head of investment banking, about the achievements of the bank, and its customers, so far, and his plans for the future.
Tell us a little about your background
I am Malaysian by nationality, and first went into banking in the UK in 2002, working for Credit Agricole in London. Initially, I was part of the securitisation team, and later became involved with asset-backed securities (ABS) when the ABS market was at its peak, which has given me very valuable experience later in my career. In 2004, at a time when interest in Islamic finance was growing, I moved to Bahrain to set up an Islamic banking product team. Again, this was a very interesting and valuable part of my career, playing a role in the shaping of this market. After two years, I moved to Dubai where I set up the Barclays Capital sukok (capital markets) business. During this time, we initiated the world’s largest sukok transactions, and achieved a number of ‘firsts’ including the first exchangeable sukok, the equivalent of an exchangeable bond.
In 2008, I was invited to join ADCB to set up its investment banking operation. In many respects, it was a difficult time to start a new bank, given the global financial crisis that was rocking the markets around the world, but UAE was a relatively safe haven during this period, and it was a remarkable experience to be involved right from the beginning in the development of a bank that has since demonstrated such significant value to corporates, governments and financial institutions in UAE and the wider GCC, both those headquartered in the region and foreign multinationals.
What characterised the early years of investment banking at ADCB?
For the first five years, we focused on three key pillars that were consistent with the needs of our customers at that time: structured debt financing, wider structured finance solutions, and syndicated loans and capital markets. For example, our structured debt finance services offered real estate financing and construction financing through to securitisation of leases post-construction. Wider structured finance solutions included acquisition financing, project financing include recourse, non-recourse and highly leveraged transactions. In the capital markets, we underwrote and book-ran corporate loans through to long-term project financing with syndicates of both regional and foreign banks.
How did ADCB differentiate its investment banking offering compared with foreign banks with a presence in UAE?
We had a strong balance sheet throughout the crisis, a period through which many banks struggled. We offered, and continue to offer, a unique skill set, attracting many of the world’s finest banking professionals who are based in UAE, offering a combination of product expertise, industry track record and regional and global insights from which our customers benefit enormously. The combination of financial strength with local and global expertise has often enabled us to undertake transactions that many other banks could not, such as real estate financing in UAE.
How have the bank’s investment banking activities evolved from its early financing roots?
Our investment banking operation has evolved dramatically, with new solutions and services, innovative technology, an expanding range of skills and expertise and a strongly customer-focused culture. These have in turn led to substantial growth in market share. For example, there was no appetite for equity capital and M&A during, and immediately following the crisis, but we are now seeing a significant growth of interest, which we support through our corporate finance function within investment banking. We are now frequently appointed as lead manager, and we offer a comprehensive corporate finance advisory service. In addition to the depth of our financing capabilities, customers are attracted to our on-the-ground product knowledge and service delivery. In contrast, many foreign investment banks have only coverage capabilities located in the region, with specialist knowledge located in other locations and time zones.