Exclusive Interview with Carol Fong, Group CEO, CGS International Securities: Leveraging on our strong Chinese parentage, we are positioning ourselves as the China-ASEAN nexus and providing investors unparalleled access to opportunities

TDB: Please share with us CGSI’s latest institutional achievements and potential drivers for growth in 2024.

Carol Fong, Group CEO, CGS International Securities: With the completion of the acquisition by China Galaxy Securities (CGS) in December 2023 and rebranding of CGS-CIMB Securities to CGS International Securities (CGS International), our priority now is to double our revenue to S$700 million by 2030 and work towards our vision to become Asia’s Global Investment House.

We have made good progress so far, building a comprehensive stack of products and services including wealth solutions, prime services, investment banking and asset management, and reaching out to more client segments such as family offices. In the last year and a half, we have completed 40 investment banking deals and acquired investment banking licensing across Malaysia, Indonesia, Singapore, and Thailand (MIST). We have also successfully acquired asset management licenses across Singapore, Malaysia, and Thailand.

CGS International has launched three major ETFs in Singapore, an oversubscribed Commercial Papers Programme in Malaysia, a new line of structured warrant products in Indonesia, and led the underwriting for Credit Bank of Thailand’s initial public offering. This is a small glimpse of CGS International’s capabilities as we work towards broadening our fundamental value proposition.

Behind our diversification of products and services, is the strong support, knowledge, and expertise of our parent company and leading securities firm in China, CGS, and the largest holder of CGS Group, China Investment Corporation (CIC). CIC is one of the largest sovereign wealth funds in the world with AUM of over US$1.35 trillion.

Leveraging on our strong Chinese parentage, we are positioning ourselves as the China-ASEAN nexus and providing investors unparalleled access to opportunities in China, and vice versa for Chinese enterprises in ASEAN.

TDB: What are some key challenges that you consider have been impeding successful cross-border merger & acquisitions between Chinese and overseas firms?

Carol Fong: One of the key challenges that has impeded successful cross-border mergers and acquisitions between Chinese and overseas firms is the issue of cultural differences and divergent business practices. Southeast Asia (SEA) is a very diverse region, one with vastly different cultures, languages, exacerbated by the different political and economic stages of development across the countries. Because of these, it is very hard to navigate this region, especially if one doesn’t have a local presence and intimate understanding of the markets.

TDB: How has the CGS acquisition of CGS-CIMB Securities in 2023 differed in this regard and what have been some key learnings from this exercise?

Carol Fong: I think the biggest learning is the importance of mutual respect and understanding. CGS International has a 45-year legacy in Asia, and deep roots in SEA. Our parent company has been very cognisant of the value of having our experienced local management teams run the local operations. They have taken a very well-calibrated approach with us, being respectful of local culture and management. They understand that the success of the M&A rests upon the successful integration of both organisations. Regular study trips are held both ways to learn about one another’s businesses and operations, and build relationships. We have regular discourse and interactions, and group sharing sessions; We believe that establishing a firm foundation for our relationship is key to better collaboration and to be able to grab any opportunities that arise.

As for the integration, we have been working closely to identify specific areas where it is beneficial and devise strategies to encourage knowledge-sharing. Our IT departments are working closely, and CGS has committed a considerable amount of resources to advancing our tech capabilities.

Internally, CGS International proactively managed staff and their concerns through regular town halls and dialogue sessions initiated by management. Our goal was to ensure that employees understood they were valued and that it was ‘business as usual’.

TDB: What can clients expect next from CGSI and how are you looking to unlock further value for stakeholders?

Carol Fong: This year, our clients can look forward to:

  • Enhanced capabilities in investment banking, wealth management, and asset management. We are building our teams to deepen our bench strength and expand our product offerings to our clients.
  • Increased access to Asian markets. We will be strengthening the China-ASEAN connection and facilitating more capital and deal flows between the two regions. By bridging businesses in China with opportunities in SEA and vice versa, we will uplift the businesses in ASEAN, especially in our main MIST markets.
  • A stronger focus on ESG. We have formally integrated ‘Sustainability’ into our Group’s core values to champion sustainable growth and societal impact. Since 2021, we were the first investment house in Asia to fully integrate ESG analysis into our research reports. Keep an eye out for CGS International’s first Sustainability Report and the launch of the Asean Chapter of CGS Institute of Carbon Neutrality coming soon.

One of our key advantages is our strategic setup: with CGS in China facilitating approval from the China Securities Regulatory Commission and CGS International in SEA securing approval from the respective bourses, our clients can tap on the firm’s strong connections in the region. There are few companies that can provide the same value.

We are currently working on five mandates, including one from a Hong Kong-listed company looking to dual list in this region. I believe that once it succeeds, it will open the floodgates for us as companies become aware of our unique value proposition, and build CGS International as a go-to investment house for deals in Asia.

 

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