Crosby has bridged the gap between its pan Asian ambitions and its current product range with the hiring of DC Lee to run a greater China investment banking group. Lee will bring with him another five bankers to form a core team. The names of the other bankers will be revealed at the end of the month.
Lee is well known in greater China investment banking circles. Until a year ago, he ran Core Pacific Yamaichi's investment banking team in Hong Kong and has worked with Core Pacific in Taiwan and Hong Kong since 1989.
Last year he joined Shanghai Land Holdings as managing director and right hand man to Chau Ching-Ngai, the chairman of Shanghai Land and the11th richest man on the mainland (and also the first Chinese owner of a Ferrari in recent years). His contract with Shanghai Land was for one year in which time he worked on a number of acquisitions to turn the group into a property, trading and financial conglomerate.
But after his contract expired, Lee - and his clients - felt it was time to go back to investment banking. He was attracted to Crosby by its "independence and full Asian coverage". Despite taking a salary cut, Lee is looking to do deals in a number of different niches.
Mainly he is looking at Chinese M&A - inbound, outbound and pure domestic - which he believes is about to boom. Domestically, of the 1274 listed A share companies, last year 168 of them applied to change control, in other words were involved in M&A. Moreover, as increasing numbers of foreign companies expand in China they will be seeking domestic capital. Given the wait for A-share listings, many of these companies, particularly Taiwanese, are seeking to acquire listed companies and their listing status.
Then there is the ongoing wave of Mainland Chinese companies seeking foreign acquisitions. Lee believes this will continue apace as China replaces Japan as the region's economic engine. There are also opportunities in more traditional areas such as Hong Kong listings of private Chinese companies. Despite the problems caused by the Euro-Asia debacle, Lee still notes that there is huge demand for Hong Kong listings by Chinese companies. He points to his record at Core-Pacific Yamaichi where he did 31 GEM and main board listings as evidence that Crosby will succeed in this competitive area, which is also under intense regulatory scrutiny.
Crosby is fast growing into a niche investment bank since Techpacific acquired it in 2001. As with most emerging boutiques it has a business model that is underpinned by annuity type revenues from which the dealmakers ply their trade. In Crosby's case, it manages funds in a venture capital and asset management vehicle, which pay fees that cover the basics. For deal makers such as Lee, the low cost base means that their end pay is more directly aligned with their performance than if they were working at a larger institution.
"Our belief is that there will be a place to make money in a core, niche, boutique investment bank in Asia," says Johnny Chan, Managing director of Crosby in Hong Kong. "Asia's markets are undeserved by firms willing to look at smaller deals."
Since joining the firm on March 3, Lee claims that he already has a mandate, although he is not indicating when that deal might close.