CLSA has forged a new alliance in Korea, in a sign that the firm is going to try and beef up its investment banking revenues from Seoul. Its new partner is Investus Global, a newish firm run by the well connected Jae Rok Kim.
Investus Global is Korean advisory firm formed in March 2002, and whose promotional material states it has already completed 20 corporate finance advisory assignments, including the recent restructuring of SK Global. Its CEO and chairman, JR Kim started life on the political side and in 1997 was a special advisor to Kim Dae Jung on his successful presidential bid. In his six page CV it states "Mr Kim attributes his successes to date to his establishing, maintaining and utilizing a vast human network." Later in a meeting with FinanceAsia he laughed that his golf game was also a factor.
A highly charismatic character, Kim formed Investus with 30 staff he brought with him from Arthur Andersen, which he joined in 1999 and ran locally. He says he left Andersen because of strategic differences with head office, and walked out the door two weeks before the Enron scandal broke. He takes credit for building Andersen's lucratrive restructuring and corporate finance business in Korea.
His reason for launching Investus was his belief that "consulting should become more like investment banking. But Arthur Andersen didn't accept this." But obviously Investus did not have an investment banking license or research capabilities, so he later concluded "The most efficient way forward was to merge or ally with an existing investment bank."
The fit with CLSA was good because it needed "help with its investment banking presence in Korea, especially forming local relationships." It is here that the well connected Kim and his team can help.
The alliance was the product of a three hour lunch in June and the idea is to try and do ADRs, GDRs and convertibles for medium-sized Korean companies. Thanks to Kim's strong relationships with the captains of Korea industry, the alliance will also focus on cross-border M&A advisory, especially where larger Korean companies are moving into China and India. Likewise, through his government connections he hopes the alliance - called CLSA Investus Global - will also be able to work on M&A advisory where the government is a seller.
A big advantage he says Investus has is its local execution skills - with 50 professionals on the ground. "We are very strong on labour union issues," he says. "We know how to manage situations and better control the unions." Possibly more than any country on the planet this is a key part of Korean M&A.
He adds that since forming the alliance, several mandates have already been won and its co-lead role on the $300 million GDR for IBK (led by ING) is a start. "We will lead manage a deal of our own very soon," he promises.
"This alliance with CLSA is a unique thing in Korea," he says. "It's the first time it has happened and is part of the financial services industry's big bang here."