US investment bank Jefferies chooses KB over Mirae Asset

Jefferies Group headquarters in New York / Courtesy of Jefferies Group

By Park Jae-hyuk

Jefferies Group has selected KB Securities as its new Korean partner this week, ending its seven-year alliance with Mirae Asset Daewoo.

Market insiders are paying keen attention to the U.S. investment bank's latest decision, expecting that competition will heat up between the two Korean securities firms in the Asian investment banking industry.

According to the brokerage arm of KB Financial Group, Monday, Jefferies will distribute equity research on Korean companies produced by KB Securities to its global clients, under their latest arrangement establishing a co-brand alliance for equity research, sales and trading. KB Securities will also provide local equity brokerage services to Jefferies and its international clients.

In addition, they plan to host various events for their clients, such as conferences overseas and non-deal roadshows.

KB Securities said it will enhance its competitiveness in the global market by improving its sales and trading processes and utilizing the global networks and platforms of the world's ninth-largest investment bank in terms of sales. The Korean financial firm seeks further cooperation with its U.S. partner in the brokering of foreign stocks, derivative products and initial public offerings overseas.

“We are pleased to partner with Jefferies in this important new initiative,” KB Securities head of institutional marketing and sales Scott Seo said. “We anticipate this new relationship will further enhance our already-strong equities business by leveraging Jefferies' global equity distribution platform and expect that it will mutually benefit our clients.”

Jefferies expected the alliance with KB Securities will further enhance its equities franchise in Asia and become another step in its long-term investment in the region.

“As part of our ongoing effort to meet the evolving needs of our global institutional clients, we are very pleased to begin working with KB Securities in Korea,” Jefferies Asia President Murray Wilson said. “This alliance will strengthen our Asian equities business and further enhance our ability to provide clients with best-in-class strategy and research ideas coupled with market-leading execution and distribution.”

The partnership between Jefferies and KB Securities had been anticipated since the former was reportedly involved in KB Kookmin Bank's previous sale of its stake in SK Holdings worth 500 billion won ($461 million) in a block deal in which KB Securities served as the underwriter.

At the time, it was a surprise for investment banking officials that the Korean financial firm had been selected as the underwriter for such a large deal because most companies here have tended to ask foreign investment banks to handle their block deals.

Industry officials therefore expected an alliance between Jefferies and KB Securities would be announced soon, leading to the termination of the former's relationship with Mirae Asset Daewoo.

KB Securities has yet to clarify whether its recent partnership with Jefferies came out of the block deal.

Mirae Asset Daewoo confirmed its alliance with the U.S. firm had ended on Sunday, although the company said there still remains room for the two to cooperate in other sectors of the global financial market.

The Mirae Asset Financial Group subsidiary had joined hands with Jefferies in 2013. Its Vietnamese subsidiary also signed a similar agreement the following year to provide equity research on companies in Vietnam.

According to media reports and industry sources, KB Securities is considering forming additional ties with Jefferies for the Vietnamese market.

At this moment, Jefferies has similar agreements with several firms throughout Asia, including Mandiri Sekuritas in Indonesia, KAF Securities in Malaysia, JB Securities in Sri Lanka, Fubon Securities in Taiwan and Regis Partners in the Philippines.

In total, Jefferies and its alliances cover approximately 1,500 companies across the Asia-Pacific region and over 3,000 companies worldwide, providing their clients with comprehensive equity research coverage of regional companies.

Founded in 1962, the New York-headquartered company has provided a full range of investment banking, advisory, sales and trading, research and wealth management services across all products in the Americas, Europe and Asia.