(Nov 11): AMTD Group is eyeing a virtual banking licence in Singapore but, before it has even put in an application, it has already established a significant physical presence in the city state.
On Sept 19, the Hong Kong-based, New York-listed financial institution spent $289 million to buy part of the OUE Downtown mixed-use development in a joint venture with Far East Consortium International. The JV purchased the Oakwood Premier serviced apartments and has renamed it Oakwood Premier AMTD.
For Calvin Choi, chairman and CEO of AMTD, buying this property is a strong signal of the big plans he has for the company in Singapore and Southeast Asia — regardless of whether AMTD gets a virtual bank licence.
Choi tells The Edge Singapore: “We see a hub for us to expand into Southeast Asia. A [virtual banking] licence in Singapore will, it is hoped, [enable us] to do more business and expand beyond Singapore into the rest of Southeast Asia.”
While AMTD might be a relatively new name in the local financial services industry, the companies Choi used to work at are not. Until 2016, he was a managing director of UBS’ investment banking unit. He has also worked at Citigroup, PwC and Arthur Andersen.
AMTD, which obtained a virtual banking licence in Hong Kong recently, is a top-tier sponsor at the Singapore Fintech Festival, which has become a natural gravitational point for regional players keen to enter the fintech space. AMTD is one of the two founding corporate members of the Asean Financial Innovation Network, and Choi is on its board of directors.
From its Hong Kong base, the company will expand across the Greater Bay Area to capture the much bigger market in southern China with its suite of digital-based financial products and services.
Choi says, with the world becoming increasingly digitalised, financial services are no longer tied to physical branches but more likely to be delivered as a digital service. For traditional banks, they have to be on the defensive; for companies like AMTD, it means new opportunities to move quickly.
“Ultimately, we will not be restricted to one place. We see a future roadmap where we want to connect more digital assets and platforms, connecting the Hong Kong and Singapore platforms to ultimately provide a completely digital solution to every client,” says Choi.
In June, the Monetary Authority of Singapore announced plans to issue up to five digital bank licences: up to two digital full bank licences, covering retail banking, and up to three digital wholesale bank licences, to target small and medium-sized enterprise (SME) banking clients.
Choi is keen on both types of licences. “We want to be comprehensive in terms of our reach to different customers and potential partners, or existing partners. We could be working with different partners for different licences but, overall, it is to equip us with more possibilities,” he says.
AMTD was founded in 2003 as a primarily consumer-oriented wealth management platform. After Choi, with his investment banking chops, came on board in 2016, AMTD became better known for helping a slew of China and Hong Kong companies list.
Choi points out that while AMTD is known for arranging IPOs and other investment banking activities, this business segment contributes less than half of its overall revenue even though it is one of the largest independent investment banks in Asia-Pacific. The company is also a leading manager for offshore US dollar assets, on behalf of clients in China. In addition, it is the largest insurance broker in Hong Kong. “We are active on many fronts,” says Choi.
NYSE listing opens more doors
In August, AMTD International, its investment bank subsidiary, was listed on the New York Stock Exchange. Its IPO was priced at US$8.38 and more than 20.7 million shares were sold, raising US$174 million ($236.2 million). AMTD International shares closed at US$8.40 on Nov 4, valuing the company at US$1.94 billion.
Why did Choi not list in Hong Kong, its home market, where it presumably has much better brand recognition? His reason for a NYSE listing was very simple: AMTD’s ambition is not confined to a particular geography. It is already one of the largest independent investment banks in Asia, has global clients and investors, and invests in markets all over the world. “We connect the flow between the buyers and sellers. Every time we market a deal, we sell globally, not just locally,” he says.
With the US listing, AMTD became the first Hong Kong financial institution and first Asian investment bank to list there. The company’s market value of some US$2 billion is on a par with some of its peers in the US.
“For us, it is a superb opportunity. The US listing has helped us open more and more doors. In fact, we are not just doing Hong Kong IPOs; we are actively doing US IPOs too. By having our own listing there, we can showcase to everyone that we are not only active there, but we are the experts too,” says Choi.
In September 2018, AMTD completed its first US IPO. It helped Chinese fintech company X Financial list in the US, raising more than US$100 million. Since then, AMTD has been involved in the US listing of four companies: Weidai, an auto-backed fintech platform; TuanChe, an automotive marketplace; 360 Finance, a consumer finance platform; and Aptorum Group, a Hong Kong-based biopharmaceutical company. AMTD is in the midst of helping online information platform 36Kr list in the US. “We are very active now,” says Choi.
Staying close to clients
AMTD has been using the “spider” metaphor to describe the way it functions. Choi explains that, just like a spider web, AMTD likes to “stick” to its clients. “Once we have the first opportunity to open the first business relationship with a client, we would never lose it,” he says. The company, he adds, will try to identify other areas in which it can service the client or, in internet parlance, isolate the pain points and provide a constant stream of relief. “So, we keep rolling the client, like a spider web. Of course, we don’t see ourselves providing poison — we provide vitamins. We enable and empower them, we synergise with them, and they are able to get the most value out of our relationship with them, and we maximise the value creation for them over different dimensions,” says Choi.
Xiaomi Corp is one such company in AMTD’s spider web. Xiaomi is well known for its range of value-for-money smartphones, but it has diversified into other consumer electronics and internet services. When the Beijing-based company had its IPO in 2018, raising US$4.7 billion, AMTD was one of the financial institutions that helped in the listing process.
In May, AMTD announced that its joint venture with Xiaomi, called Insight Fintech, had secured a virtual banking licence from the Hong Kong Monetary Authority. Insight Virtual Bank, as the licensed entity is called, is slated to open for business by year-end.
“We grab and act upon opportunities where we can, always synergising every relationship. At the same time, we are becoming long-term partners to every client,” says Choi.
He declines to say whether Xiaomi will be AMTD’s partner in its bid for the virtual banking licence in Singapore, as this might be construed as market-sensitive information. Choi also declines to name the other partners or potential ones he has lined up for the bidding, as they are “too obvious”, saying only that he is in “very serious talks” with a few.
Referring to the Oakwood Premier property, he says, “When I throw US$200 million into a building, of course I am serious about the market.”
