By Kim Da-ye
Being Korea’s largest brokerage in terms of market cap apparently does not satisfy Daewoo Securities. The subsidiary of KDB Financial Group says that it will grow into Asia’s global investment banking house reaching large markets including China.
Under the KDB Financial Group’s objective to be part of the top 20 global corporate and investment banking firms by 2020, Daewoo Securities says it will achieve balanced growth among its businesses units, recruit talent and expand its network abroad.
The brokerage has already opened branches in the international financial hubs including New York, London and Hong Kong while operating 129 large-scale domestic outlets. In Asia, it set up offices in Tokyo in 2006, Ho Chi Minh City in 2007 and Beijing in 2009.
It also targets other emerging markets including Indonesia and Malaysia. In order to reach them efficiently, Daewoo signed a partnership with Alliance Financial Group of Malaysia, under which it underwrites initial public offerings (IPOs), manages acquisitions and trades foreign stocks.
The securities firm says that its strength in investment banking comes from being part of the KDB Financial Group which was formed in October last year. The firm is working and sharing information with the Korea Development Bank (KDB), which has already established 14 foreign branches and offices in North America, Europe, Asia and even Latin America.
“When our branches work with to those of KDB, we will be able to create a considerable synergy effect,” said Daewoo Securities in a statement. “That will help us obtain a competitive edge in Asia within a short time.”
For instance, Daewoo says that the cooperation with KDB Hong Kong can boost the brand awareness of Daewoo and it can benefit from the combination of KDB’s strengths in debt capital market (DCM), mergers & acquisitions (M&A) and private equity fund and Daewoo securities’ in equity capital market (ECM), research and retail sales.
The Asia Pacific headquarters in Hong Kong is expected to play an important role in underwriting as well as trading foreign stocks. It will also source M&A deals at first, and manage them on its own later.
Daewoo Securities recently raised the capital of the Hong Kong branch from $10 million to $40 million. It says the branch will set up the “matrix system” consisting of various financial operations, recruit more talent, and allocate responsibilities to each department.
The brokerage says it expects more foreign firms, especially the Chinese, will increasingly get listed on the Korean stock market and the Hong Kong headquarters should actively source deals.
In addition, Daewoo says its IPO team has signed contracts with a total of 12 foreign firms with some in Japan, the U.S. and the U.K. It also aims to Korean and Chinese firms in getting listed in the Hong Kong bourse.
To attract more foreign investors, it plans to keep upgrading the Direct Market Access (DMA) service and recruit more analysts to provide timely English-language reports.
The company’s marketing activities have also become more aggressive. Its CEO Im Kee-young participated in the “Corporate Day” events that took place last year in Europe and the U.S. and in March and April in Hong Kong and Singapore. Im introduced domestic firms to foreign institutional investors, and Daewoo says it will continue hosting the events regularly to lure more foreign investments in Korean stocks.
For trading of bonds, Daewoo plans to sell government bonds and other Korean-currency bonds to foreign institutional investors while expanding its business to trading foreign currency bonds issued by domestic and foreign firms.
Furthermore, the company wants to expand its overseas business to Southeast and Central Asia.
The brokerage acquired this year shares of e-Trading Securities of Indonesia and now owns 38.35 percent of the company while having a close relationship with management.
The brokerage has actively invested in the Indonesian firm since 2007, especially in its information technology infrastructure, and the e-Trading Securities has reported a good growth.
“Daewoo Securities will support eTrading Securities’ stable growth sustained by its online brokerage business model and plans to send the headquarters’ investment banking staff so that it can source various deals,” said the brokerage.
“We want to bring this successful example to other emerging markets in Southeast Asia and Central Asia and set it as a role model in Daewoo Securities’ export of financial products.”