M&A Trends in Asia: Key Drivers, Challenges and Risks That May Effect

Those Outlooks

SPEAKER PRESENTATION | 11:30 – 12:00

Dato’ Kong Sooi LinCEO - CIMB Investment Bank

M&A Trends in Asia and the Key Drivers, Challenges and Managing Risks that AffectThose Outlooks

13 April 2016

Dato’ Kong Sooi Lin

Chief Executive Officer

CIMB Investment Bank Berhad

ASEAN FOR YOU

Section 1

Overview of M&A Trends

2015 was an extraordinary year for M&A, with global M&Areaching record levels

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015

Source: Bloomberg

0

2,000

8,000

1,500.00

6,000

1,000.00

4,000

10,000

12,000

-

500.00

2,000.00

2,500.00

De

alC

ou

nt

Vo

lum

eo

fD

eal

s(U

SD b

il)

Global Completed M&A Activity by Quarter

Volume of Deals Deal Count

4

Regionally, M&A activity in Asia Pacific remained sustainabledespite declining economic growth in China

Source: Bloomberg

- 500 1,000 1,500 2,000 2,500 3,000 3,500

North America

Middle East & Africa

Europe

Asia Pacific

South America

Global Completed M&A Deal Values by Region (USD bil)

2013 2014 2015

24.7%

20.5%

21.8%

45.8%

26.4%

5

With markets opening up, M&A activity in emerging Asia Pacificcountries are picking up

6

Source:MergerMarket

Country Deal Count Deal Value (USD mil)

2014 2015 % change 2014 2015 % change

Cambodia 4 3 (25.0%) 92 453 392.4%

Myanmar 5 9 80.0% 208 937 350.5%

Vietnam 24 42 75.0% 772 3,082 299.2%

Philippines 46 38 (17.4%) 3,985 5,092 27.8%

Laos - 2 - - 134 -

Brunei - 2 - - 386 -

Thailand 47 52 10.6% 5,754 5,060 (12.1%)

Singapore 147 104 (29.3%) 27,195 22,524 (17.2%)

Malaysia 92 75 (18.5%) 11,625 7,056 (39.3%)

Indonesia 75 56 (25.3%) 5,774 2,790 (51.7%)

Notable deals in Asia PacificTM

TO

&G

Co

nsu

mer

2013 (USD 865.0 mil)Acquisition of Axis Telekom

Indonesia (95%) by XLAxiata

2015 (USD 350.0 mil)Acquisition of GrabTaxi (undis. stake) by ChinaInvestment Corporation

2011 (USD 3.9 bil)Merger of SapuraCrest and

Kencana

2012 (USD 2.9 bil)Acquisition of Seadrill

(100%) and Nordrill (94%) by Sapura Kencana

2015 (USD 394.0 mil)Acquisition of Perdana

Petroleum (70.23%) by Dayang Enterprise Holdings

2016 (USD 472.0 mil)Acquisition of Shell Refining

Company (51%) by Shandong Hengyuan

2011 (USD 1.7 bil)Privatization of QSR Brands

by Johor Corporation, EPF and CVC Capital Partners

2014 (USD 247.0 mil)Privatization of JTI Malaysia

by Japan Tobacco

2014 (USD 329.0 mil)Acquisition of Etika’s dairy

business in Southeast Asia by Asahi Group

2014 (USD 430.0 mil)Privatization of Malaysia

Airlines by Khazanah

2013 (USD 250.0 mil)Acquisition of Lazada Group

(undis. stake) by Tesco

2014 (USD 600.0 mil)Acquisition of JobStreet

Malaysia (100%) bySeekAsia

Avi

atio

n7

Source:MergerMarket, CIMB

Section 2

Key Drivers

There are a number of key drivers that are expected to shape M&Atrends moving forward

Restructuring of corporatesRestructuring exercises have seen corporates divesting non-core or underperforming businesses and assets, as part of their respective corporate strategies, thereby creating opportunities for domestic companies, private equity firms, and foreign corporates

Consolidation trendsThe drop in crude oil prices and the slowdown Of China’s growth are expected to create a consolidation trend among related countries and sectors

China’s One Belt One Road (OBOR) initiativeThe Chinese government’s initiative to encourage outbound investment through the OBORinitiative will see more investments by Chinese investors abroad

Japan’s outward focusThe ongoing economic reforms and changing demographics are driving Japanese corporates tolook abroad for growth prospects

Availability of attractive financingCorporates who are able to borrow at very competitive rates are encouraged to engage in cross-border M&A transactions

9

Restructuring/ distressed corporates

sell assets as a means to improve their cash

position

Corporates are divesting non-core or underperforming businessesand assets

Key Factors Notable Deals

Misalignment of management, licensing issues, and ineffective

control of Board

Restoration of company balance sheet

10

Global strategic realignment

Restoration of company balance sheet

The drop in crude oil prices has ramped up M&A in the oil and gasindustry

Source: Bloomberg as at 11 Apr 2016

Apr-12 Apr-13 Apr-14 Apr-15

110

Apr-11

5 year high @ USD109/bbl (Apr 2011)

Plummeting oil prices has caused by growing supply has changed M&A dynamics in the oil and gas industry

Valuation of oil and gas assets have plunged; lower oil prices creates intense cost and cash-flow pressure

Oil and gas players who are have healthy balance sheets position are taking advantage of the depressed valuations to embark on M&A expansion

5-Year Brent Price (USD/bbl)120

10

100

90

80

70

60

50

40

305 year low @ USD30/bbl (Jan 2016)

20

We see a number of other noticeable changes in China that mayaffect M&A activity in the region

12

China’s shift from an industrial economy to one driven by consumer services

The services sector now accounts for 48% of economic output, compared to 43% for the industrial sector

Private Chinese companies are beginning to venture beyond borders

In 2010, SOEs accounted for approximately 90% of deal value for cross-border transactions.Statistics in 2014 show that the influence of privately owned enterprises in outbound valuedeals has grown to approximately 41%

The Chinese government appears to be facilitating M&A

Regulatory reforms in China have been implemented to bring about transparency andremove barriers to the approval process for outbound acquisitions

Financing in China is being streamlined

China’s banks are being encouraged to lend to companies engaged in cross-border M&A

China’s OBOR initiative offers great potential opportunities forSoutheast Asian countries

Source: China-Britain Business Council

Beijing has undertaken 19 global infrastructure deals worth USD6.8 billion in 2015 as part of its OBOR initiative

The OBOR initiative is aimed at opening up trade and investment opportunities along a land route (the “Silk Road Economic Belt”) and a sea route (the “21st Century Maritime Silk Road”)

Silk Road Economic Belt21st Century Maritime Silk Road

Source: TheLoadStarwebsite

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In response to in-country pressures, Japanese companies areactively looking abroad for growth prospects

14

Falling GDP and Changing Demographics

Despite economic reforms, Japan remains saddled with falling domestic consumptioncompounded by an ageing and shrinking population, forcing Japanese corporates to searchfor new markets for growth

“Third Arrow” of Abenomics

As part of the structural reforms being carried out under the “third arrow” of Prime MinisterShinzo Abe’s so called Abenomics, coupled with negative interest rates, Japan’s cash richcompanies remain under pressure to put their money to work for shareholders

Outbound Infrastructure Projects

India selected Japan to help build its first high-speed rail link. The project will likely seecorporates from both countries form joint venture initiatives with local parties to introduce avariety of infrastructure, technologies and related standards

Japanese corporates have set their targets on a number of keysectors in Asia Pacific

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Sub-sector Target’s Business Description

Logistics

ForwardingProvides warehousing and railroad, motor truck, marine, port and airtransportation

Third Party Logistics Provides cross-border third party capabilities and cold chain logistics

Warehousing Provides general warehousing or storage capabilities

Information Technology

System IntegratorProvides IT system integrating services for financial services,telecommunications, data centres, cloud and manufacturing sectors

IT Consulting Provides general IT consulting and/or SAP implementation

Wholesale Distributor

Food Distributor Involved in the distribution of Japanese food products

Manufacturing

Toiletry & Cosmetic Products

Manufacturing and sales of FMCG products such as domestic and commercial detergent, toiletries and cosmetics

PackagingManufacturing and sales of glass bottles, PET bottles, aluminum cans,plastic containers, corrugated box packaging and flexible film

Section 3

Risks and Challenges

1 2

3 Family-controlled businesses

High proportion of large businesses in Asia arefamily owned and controlled

The transfer of stewardship of thesebusinesses from the founding family to newmanagement can be challenging for Asia’sdynastic families

家 (jiā) | Family16

4 Pro-democracy movements

Pro-democracy movements in Asian countrieshave increased political uncertainty (e.g. changein government) and social uncertainty (e.g. riots)in the regione.g.

Protectionism and regulatorypressures

Protectionism and other regulatory pressuresare a major source of concern in cross-borderM&A

Costs vs. synergies

What acquirors fear the most is the lack ofpredictability that it creates

Merger integration and synergy realizationremain challenging and should be evaluatedprudently against the transaction andintegration costs, especially where culturalintegration becomes a bigger challenge

Thailand – Anti-government protests Hong Kong – Umbrella Revolution Malaysia – Bersih rallies

Despite its attractiveness, cross-border M&A activities are boundby certain risks and challenges that require careful evaluation

Appendix

CIMB’s M&A Credentials

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CIMB’s M&A Practice Builds on the Unmatched Depth and Breadthof Our Asia Pacific PresenceCombination of extensive geographical reach, local execution capability anddeep sector expertise offers clients a unique M&A proposition

CF hubs Sector expertise

*) Frequent collaborators with CIMB on global cross-border M&A opportunities

Investment Banking Presence CorporateFinance Execution Hubs Sector Expertise

Bahrain Laos

Global Reach - Selected Network Partners*

Seoul

Bangkok Hong Kong

Kuala Lumpur Singapore

Jakarta

Mumbai Colombo

Myanmar

Vietnam

Malaysia

Thailand

Taiwan

Sri Lanka

Singapore

Indonesia

China

Hong Kong

Korea

India

Brunei

Bangkok Kuala Lumpur

Colombo Mumbai

Hong Kong Seoul

Jakarta Singapore

Agriculture

Financial Institutions

Industrials, Consumer and Healthcare

Power, Utilities & Infrastructure

Metals & Mining

Oil & Gas

Real Estate

Technology, Media & Telecom

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THANK YOU