Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
In-house experts make investment banks less necessary
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By Park Jae-hyuk
By Park Jae-hyuk
Large deals being conducted without the involvement of foreign or domestic investment banks are occurring more frequently in Korea, as a growing number of conglomerates here are recruiting investment banking experts, according to industry officials, Wednesday.
The latest example is the agreement between SK Telecom and Amazon last month, regarding the latter's plan to acquire up to a 30 percent stake in 11st, the former's e-commerce subsidiary. The Korean mobile carrier established a taskforce to handle the international contract in October last year and held talks with the U.S. e-commerce giant without hiring a global investment bank.
Sources familiar with this issue said SK Telecom's strategic investment group head Jason Song, who worked for Macquarie Group, Deutsche Bank and Goldman Sachs, utilized his personal network with Amazon's top executives to push the deal through.
Another example is the 600 billion won ($550 million) stock swap deal between CJ Group and Naver signed in October. The two companies had sought to make the deal since late last year and completed the process without the service of an advisory firm.
The success was attributed to Naver's recent efforts to reinforce its in-house M&A department, which included the hiring of Senior Vice President Kim Nam-sun, a U.S. lawyer who graduated from Harvard Law School and worked for Morgan Stanley and Macquarie before joining the Korean IT firm in July. Naver is looking for junior-level accountants and investment bankers as well, according to sources.
CJ's latest attempt to sell its Tous Les Jours bakery chain to the Carlyle Group is also mentioned as an example of the deal led by in-house experts.
Although the Korean firm hired Deloitte Anjin and several foreign investment banks for the planned disposal, CJ Executive Vice President Lee Hee-jae, who worked at Goldman Sachs, JPMorgan and Deutsche Bank, is known to be the person who enabled talks with Carlyle managing director John Kim, his former colleague at Goldman Sachs.
Market observers expect the recent trend will make it more difficult for investment banks to profit from participating in big deals in Korea.
In the past, most Korean conglomerates relied on foreign investment banks for major deals because they lacked in-house experts with global networks and abilities to devise a creative deal structure. However, large businesses have secured more M&A experts lately and given them top positions in key subsidiaries.
Earlier this month, SK promoted Executive Vice President at Investment Center 1 Choo Hyeong-wook to the position of president of SK E&S. CJ appointed the group's point man for strategy and finance, Choi Eun-seok, as the CEO of CJ CheilJedang. Lotte gave the chief executive seat of the Lotte Institute of Economy & Business Strategy to Lotte Chemical Vice President Lim Byung-yun, who is known for his expertise in overseas M&As.
“The fewer participants in a deal, the easier it is to guarantee confidentiality until the deal closes,” an industry source said.
Amid growing concerns among investment banks, Mirae Asset Daewoo preemptively streamlined its investment banking departments in its latest reshuffle by merging the three departments into two.