Last November, DBS hired investment banking veteran, George Hongchoy to run DBS Asia Capital. The goal was to build a strong investment banking franchise. Hongchoy had been with NM Rothschild, JPMorgan and Jardine Fleming in a career that has spanned over 40 equity deals and 50 M&A transactions.
Hongchoy has now made three other key hires as he seeks to flesh-out the platform and deliver quicker growth. The three managing director level hires are Michael Yao, Jason Wong and Liu Xiaofeng.
Yao comes in as head of ECM, after a successful career mostly spent at Goldman Sachs, where he was a managing director. Yao has worked on some of the region's biggest deals, such as Petrochina's IPO, and has also run his own boutique investment bank.
Wong arrives as head of M&A and was previously at Tom Group, where he was responsible for its acquisitions. Prior to that he was at HSBC Investment Bank.
Liu is the new head for China and arrives with a similar career path to Hongchoy, having also worked at both NM Rothschild and JPMorgan.
Here they discuss their plans:
Can you talk about how your new hires will impact your strategy?
Hongchoy: We have made some key hires and now the team is in place it's up to the four of us to build the business. We already have a track record in IPOs and M&A, but we hope to do more. We're building up the platform in China and are working very closely with our DBS banking colleagues in China as well.
Wong: Myself, Liu Xiaofeng and Michael Yao joined about three weeks ago.
Yao: We are a mid-cap investment bank, but we're looking to grow the deal size of our transactions. We're looking at deals of anywhere between $50 million to $150 million and we'd like to evolve to the higher end of that range. Sector-wise we are very strong in consumer, TMT, energy and the property sector, and given my background we are looking to build up in the financial services sector as well.
How many bankers will you have covering clients?
Yao: I have 17 bankers in the group focused on capital markets.
Wong: The M&A group, which I will run, is a little bit smaller with eight bankers. In terms of our M&A strategy, we want to be more methodical and focused and are looking at companies with market capitalizations of around HK$5 billion ($640 million), and with a view of closing transactions in the range of up to $200 million.
Liu: I will be based in Beijing, and travelling frequently to Shanghai. I will be targeting mid-cap companies to source deals. On the equity capital markets side, one advantage we have over our peer group is that I will be able to give clients the option to list on the Singapore stock exchange since DBS has very strong distribution in Singapore. And since DBS is so strong in REITs, that gives us an advantage when talking to property companies. We also have an extensive branch network in China that complements our product range, as well as lots of corporate bankers with relationships.
The China mid-cap sector has become increasingly competitive in the last couple of years. What will be DBS' unique selling point versus other investment banks?
Hongchoy: Unlike the big blue chips, that have a team of people to allocate mandates to investment banks, most of the mid-caps are still run by a small group of senior managers. Ideally these senior managers would like to work with someone that can serve them in all financial products: M&A, growth financing, trade finance, loans, private equity, IPO, and treasury and so forth. So the idea is we are having product discussions with them almost all the time. This is the most unique part, compared to our competitors.
Yao: One of the other things that is interestingly unique about the bank is there is a large mid-cap corporate client base. This was inherited with the purchase of Dao Heng. We've already been servicing these clients on the corporate and investment banking side. We probably just need to tap that a little bit more.
Are you targeting mostly private sector companies, or SOEs?
Liu: We are largely targeting the private sector, but in some segments there are state companies we will approach. But by their nature, mid-caps tend to be from the private sector. We're looking for companies with good stories where we are comfortable with the management.
How many IPOs would you aim to do per year?
Yao: DBS has done quite a few mid-cap IPOs. I'd like to see us get into the neighbourhood of being in the top five in mid-cap IPOs in every market we cover. How that calculates in regard to number of deals, doesn't matter as much to me. Obviously, we want to do a lot of deals and a lot of transactions.
Hongchoy: DBS obviously has a very strong brand and we will focus on executing quality transactions. Ensuring deal quality will be very important. Our current pipeline features mainboard company listings and GEM listings, H shares and Hong Kong companies.
Is the fact that you can offer Singapore listings one of the firm's unique selling points?
Hongchoy: It's nice to give clients a choice. Some clients may choose a Singapore listing because one of their competitors is already listed in Hong Kong. Or maybe some clients feel that the Singapore stock exchange is strong in a particular sector, such as shipping or pharmaceuticals.
If you do 10 listings, how many will be in Singapore?
Liu: DBS has sponsored more than 10 China listings in Singapore.
Yao: Our Singapore story is a strong one. Anyone who wants to get access to Singapore institutions or Singapore retail will select DBS. However, my guess is our listings will predominantly be in Hong Kong. Plus, as well as IPOs I should stress that we will be doing a lot of secondary offerings as well.
Will the Singapore connection be relevant for M&A as well?
Wong: Absolutely. In the past we haven't effectively used the resources that are inside DBS. The M&A function was very much viewed as an IFA business, and there was very little use of the Singapore connections. Going forward, we intend to harvest those connections - given all the backing we have. We expect to do much more strategic M&A advisory work, and leverage on the bank's balance sheet to do more of the acquisition financing type deals.
What attracted you all to come to DBS?
Hongchoy: There are very few Asian bank platforms that have what it takes to be successful regionally. You could probably list them on less than five fingers. This bank has the aspiration to be a leading Asian bank, and part of that includes giving our clients excellent investment banking services, and being competitive in North Asia. We knew we had to bring in the right people with the right experience to have the credibility to go out and get the business but also execute it. I took that mission on, and these recent hires are part of this.
Wong: The main attraction to me is that there is a lot that can be done, especially since the Singapore resources haven't been utilized in the past. So I see a lot of opportunities, because in the M&A business connections are crucial. Yao: After Goldman Sachs, I started my own advisory firm. DBS provides for me the perfect balance between a large institutional approach and the entrepreneurial small business I was running. This is a great platform - thanks to the name - but we are also building the business.
Liu: We all share the same aspiration. And building the business will really give us a real sense of achievement. What I particularly liked about DBS is that all the senior management sits in Asia, so the decisionmaking is very quick.
Yao: Yes, and if you look at the senior management throughout the firm, you have a good combination of people who have been here for 25 years - which shows continuity and culture - and then you have a lot of external hires with international experience, such as Jackson Tai. These people have all made an impact, and more importantly they have all stayed.
Hongchoy: You always have the choice of growing slowly, or doing something more immediate, which is why we brought this new team in. We think our new hires will have a market impact and will allow us to do the types of deals we aspire to.