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| Naver's headquarters in Seongnam, Gyeonggi Province / Yonhap |
Tech giant conducting large deals without hiring financial advisers
By Park Jae-hyuk
Global investment banks have been excluded from benefiting from Naver's aggressive expansion into the global market, as the country's dominant web portal has begun to conduct large, cross-border deals without hiring financial advisory firms, according to industry officials on Thursday.
It has been usual for foreign investment banks to earn commissions by participating in big deals being pursued by Korean companies. Naver, however, completed a series of huge investments recently under the supervision of its own in-house experts.
Last week, the Internet portal operator's decision to take over the Canadian entertainment platform operator, Wattpad, for $600 million surprised market insiders because the largest-ever buyout deal in the Korean firm's history did not involve any investment banks.
Although Naver hired several foreign law firms in the United States and Canada for legal advice, the acquisition deal was directed mainly by the company's own taskforce, comprised of 10 experts in finance and engineering.
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 Naver in July, provided support to the taskforce. He is the person who helped Macquarie purchase stakes in ADT Caps and LG CNS.
Naver also completed a 600 billion won ($550 million) stock swap deal with CJ Group last October without service from any advisory firms. The success was attributed to the tech firm's efforts to reinforce its in-house M&A department.
Given that Naver has hired additional junior-level accountants and investment bankers familiar with foreign markets, the company is expected to continue ruling foreign investment banks out of its planned global expansion.
After announcing Thursday that it posted a record-high annual operating profit of 1.2 trillion won and 5.3 trillion won in sales, Naver said in a following conference call that it will speed up efforts to expand its presence on the global market.
"We are considering issuing corporate bonds here and overseas during the first half of the year to raise money for our global expansion, including investment in the global e-commerce market," Naver Chief Financial Officer Park Sang-jin told investors during the call. "We are in talks with global content providers regarding businesses in intellectual property."
Since Amazon, Netflix, ByteDance and Spotify have also shown interest in intellectual property, it has been more important for businesses to maintain secrecy when they pursue investments in content providers.
"The fewer participants in a deal, the easier it is to guarantee confidentiality until the deal is completed," an industry source said, indicating investment banks will face more difficulties in their attempts to benefit from Naver's global expansion.
Plus, the trend of lowering dependency on big-name investment banks is also being seen in other large, cross-border deals involving Korean conglomerates.
Last November, SK Telecom and Amazon agreed on the latter's plan to acquire up to a 30 percent stake in 11th Street, the former's e-commerce subsidiary, without hiring a global investment bank. The mobile carrier had organized a taskforce to handle the international contract.
Sources familiar with this issue said that SK Telecom's strategic investment group, headed by 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.
