Daewoo Securities Sets Trend in Investment Banking
By Yoon Ja-young
Staff Reporter
Since its establishment in 1970, Daewoo Securities has led the securities industry here. Especially strong in retail and research, Daewoo marked 257.8 billion won in operating profit in the third quarter last year, the biggest in the industry despite the global crisis.
Analysts pick Daewoo as the strongest candidate to become a global investment bank (IB) here. It led mega deals like the listing of Tong Yang Life Insurance, the first life insurer to get listed here, and the IPO of Korea Life Insurance, one of the biggest fish in the listing market this year.
Daewoo also led the capital increase of Hynix, the BW issuance of STX Offshore & Shipbuilding, and the IPO of Dongah Geological Engineering, and was selected as the lead manager of the IPO of Incheon International Airport Corporation.
Daewoo is leading the IPO of 10 businesses overseas that plan to list on the Seoul bourse. As foreign businesses are increasingly interested in IPOs in Seoul, Daewoo could make use of this experience as a launch pad to be a total IB service provider, including for pre-IPO investments, capital increases and corporate bond issuances. It also plans to lead IPO deals of Korean and Chinese businesses' listing on Hong Kong.
Synergetic Effect Expected
Daewoo is expected to enjoy synergistic effects, following the launch of the KDB Financial Group last October. With other group subsidiaries such as KDB Asset Management, KDB Capital and Korea Infrastructure Asset Management Corporation, Daewoo Securities is expected to become more competitive as it will be cooperating with them in various businesses including private equity funds (PEF), IPOs, or privatization of public enterprises.
It can also form a consortium to bid for public projects and design and manage derivative products together. Daewoo is considering cooperating with subsidiaries for wealth management, sharing customer information for marketing as well as enhancing consumer convenience by providing both banking and securities services.
Daewoo is expected to take a main role in the KDB Financial Group which plans to grow into a global 20 corporate investment bank by 2020.
While the securities industry had a hard time last year upon the withdrawal of money from investment funds, Daewoo Securities had equity products grow to 1.32 trillion won from 1 trillion won of the previous year. It marked notable growth in wrap accounts, ELS, retail bonds, trust and pension funds. Its CMA also grew to 2.93 trillion won from 2.07 trillion won, with the number of accounts totaling 670,000.
The growth in wealth management was also notable. Assets under management, which stood at 24.3 trillion won as of the end of 2008, soared by nearly 50 percent to 35.4 trillion won as of the end of December last year.
Globally Competitive Daewoo
Daewoo is now making a leap forward as a globally competitive player.
On top of 127 local branches, it set up subsidiaries in New York, London, and Hong Kong, and offices in Beijing, Tokyo and Ho Chi Min.
Daewoo Securities' ultimate aim is to become a global financial investment company that leads the Asian market, as the main pillar of the KDB Financial Group.
On top of the Asia big market like China, Daewoo has actively sought advancement into Southeast Asian countries with high growth potential like Indonesia, Malaysia and Vietnam, setting up alliance with leading financial companies of each country. Daewoo is cooperating with them in various fields, such as buyout financing, corporate bond issuance, or wealth management product development.
Daewoo is expected to enjoy synergetic effect as KDB is equipped with strong networks overseas. KDB has led in the M&A and PEF sectors, while Daewoo has been especially competitive in research and retail sales.