Saudi's Al Rajhi eyes Asia for M&A deals

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ISLAMIC BANKING: Al Rajhi is the largest Islamic bank in the world with total assets of $44bn and a market value of $26bn, according to company data. (Getty Images)

Saudi's Al Rajhi Bank sees opportunities for M&A deals in Asia as companies recuperate from the worst economic slump in many decades, its East Asian investment bank chief said on Tuesday.

Al Rajhi is the largest Islamic bank in the world with total assets of $44bn and a market value of $26bn, according to company data.

It recently set up a regional office in Malaysia to tap into what it sees as rising demand for sharia compliant deals.

"From a M&A angle or the advisory perspective, this is a real market. There are lot of opportunities for restructuring as well for companies to become leaner," said Leong See Meng, who heads Al Rajhi's East Asian investment banking operations out of Malaysia.

"We are fairly excited about the opportunities, they don't come every 10 years," Leong told Reuters in an interview.

Although most of Asia's trade-dependent economies are expected to slip into a recession this year as their customers in the United Sates and Europe slash spending, Leong said Al Rajhi remains bullish on prospects for the region.

"We are working on a few potential mandates. In the next few months, if things work out well, we should be able to (announce) something exciting," said Leong.

"In Malaysia, we are looking at one (potential mandate), the other two to three are around the region."

Asian stock markets have strongly rebounded since March on hopes the region, led by China, would be the first to break away from the global economic crisis.

But stock prices are still way below the highs seen before the crisis.

In spite of valuations at multi-year lows and some early signs of a recovery in China, some bankers said a pick up in M&A deals would be slow to come because buyers are still too cautious to go on the offensive while sellers are not desperate.

But Leong said sentiments on the ground are improving.

"There is always a gap (between the expectations of seller and buyer) but this gap is probably more realistic now," he said.

Leong believes Al Rajhi will have an edge over its conventional competitors in an industry upcycle when the economy fully recovers due to its sharia-compliant appeal.

Islamic banks were less hard hit than conventional lenders in the recent financial crisis. But Islamic bankers and industry officials are cautious about the outlook, as the sector struggles with a Dubai real estate slump and lingering global credit worries. (Getty Images)

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