BT EXCLUSIVE

DBS to boost Asean focus and hunt for region's next unicorns

Singapore

DBS will look to boost its coverage of Asean and throw its weight behind regional supply chains of global multinational corporations (MNCs) and emerging startups based out of Singapore, the bank's head of institutional banking group Tan Su Shan has said.

The two strategies feed off each other as the bank goes on the hunt for Asia's next unicorns by tying them up with big and mid-tier companies on the supply chain of industries, which range from logistics and car manufacturing to healthcare and finance.

Bulking up the connectivity in Asean is one of Ms Tan's key areas of focus, with her having moved from the consumer wealth and private-banking segment to the institutional banking portfolio nine months ago. She told The Business Times in an interview: "Our job is to try and we move with our clients, of course, but we also help to move our clients.

"In the past, China and North Asia were quite focused on their own backyard. But today, they're all looking outwards, and it's our job to say: 'Come to Vietnam, Indonesia ... and Singapore, and learn about these markets and meet future partners'."

In less than a year at her new post, the high-energy banking veteran has worked to cut through the "bifurcated" approach of separating small and medium-sized enterprise (SME) banking from that for big-cap companies.

She said: "You have got to link it all together. Asia is not deglobalising, it's globalising, or regionalising, and Singapore is becoming not just a financial hub, but also a logistics hub, a trading hub and an IP (intellectual property) hub."

Citing an example of the need to connect the dots, she said covering the automobile space does not end with thinking about cars.

"It stops with the battery," she said.

And that, in turn, means thinking about three key materials - cobalt, nickel and lithium, which are key to making electric-vehicle batteries that top car manufacturers from the West now want in their cars.

Indonesia mines nickel; DBS has thus linked up Indonesian metal miners with Chinese battery makers, who would then work with top car manufacturers from Germany; the bank is also connecting Indonesian mining firms with Korean battery makers.

Thinking through connectivity applies to startups as well. DBS has its eye on match-making the burgeoning number of healthtech startups based out of Singapore with the big boys - hospitals, for example.

Startups are also emerging in the logistics space, each looking to tackle last-mile issues for e-commerce players. They can collaborate with large logistics companies to solve structural problems within the sector.

Such a shift in focus for the institutional banking group at DBS has a bolt-on impact on the startup scene, as DBS doubles down on its efforts to spot Asia's next privately-held startup valued at more than US$1 billion.

Ms Tan noted that, given the high failure rate of startups, level-headed consideration needs to be applied.

Linking startups with industry's big boys brings these fledgling companies into the so-called ecosystem, effectively giving them a way in to secure contracts by bringing fresh digital solutions to the incumbents.

To help them along, DBS will a launch a business tool kit for startups. This will equip them with a suite of bread-and-butter cash-management services - including a fee-free multi-currency account - as well as access to accounting services, mentorship, digital tools and even co-working space in the bank's innovation lab.

The bank will also connect these startups with private-banking clients who may be keen to cut cheques as angel investors. To be sure, the startups will have to pass the test of these savvy investors, who would be looking for sustainability behind the deals pitched, said Ms Tan.

She is familiar with linking private-banking clients to opportunities in the private market. Before she left the private-banking unit, she had set up a private-equity (PE) club to link up investors to Series-B funding opportunities.

DBS disclosed to BT that the number of PE deals closed from this PE club has increased about five times since last year. The deals vary across sectors, including technology hardware, regional financial services and new media. The mix is spread across global and regional companies, as well as country-specific plays. The average ticket size is typically S$20 million to S$30 million in size.

DBS will "probably" expand as well its three-person venture debt team to support more startups, in part by tapping recommendations from venture capital (VC) funds that will point the bank in the direction of viable startups, said Ms Tan.

Asked about the risks behind relying on VCs' recommendations amid the rising number of alerts on frothy valuations, she said the funds based here are "sensible". "WeWork's sort of inflexion point has brought some financial sustainability back to the world. And I'm not unhappy about it because I think that makes my job a lot easier.

"It's no longer just about GMV (gross merchandise value) or the number of hits on your app, or even active users. It's about your active users creating revenue and your cost of acquisition not being crazily high.

"I think the VCs that are here are quite sensible. They're helping to introducing the founders to everybody, including people like me ... We have to leverage the VC know-how and insights to fast-track this," she said.

Asked about the transition she has made from the wealth business to institutional banking, Ms Tan quipped: "I haven't slept in nine months."

She added: "I'm grateful for the opportunity to learn, because I would never have learned about shipping or gone on tours of dry bulk (carriers) and rigs.

"In my old job, it was all about the portfolio. You know the numbers but you don't know the real business drivers, but now, I think I have a better understanding of what keeps them awake at night."