Lazard expects more Korea M&A deals next year

By Ju-min Park and Lee Chang-ho

SEOUL (BestGrowthStock) – Investment bank Lazard Ltd (LAZ.N: ) expects South Korean companies with deep pockets to beef up overseas acquisitions over the next couple of years, as they shift away from the saturated local market.

“Companies like Samsung and Hyundai are cashed up and have already achieved organic growth and they need to go overseas to grow more,” Kwon Young-bum, managing director and head of Korean investment banking, who was hired last month from Deutsche Bank (DBKGn.DE: ) to lead Lazard’s Korean unit, told Reuters.

Kwon thinks Korean mergers and acquisitions activity will improve on a quantity and quality basis, helped by easing economic uncertainties.

“It is getting clearer how to get deals done as well as estimating implied risk and costs, compared to 2008 and 2009,” Kwon said.

South Korea, which escaped the worst of the global crisis rather resiliently, has returned to the acquisition trail, spending $31 billion in announced M&As in the first nine months of this year, up 17 percent from a year ago, Thomson Reuters data showed.

More deals are in the pipeline including an estimated $6 billion plus sale of Woori Finance Holdings (053000.KS: ) and a $4 billion deal to sell Korea Exchange Bank (004940.KS: ).

Major themes in the M&A market in the next few years will be the retail business in Asia, technology and brands in developed countries and natural resources such as oil fields or rare earth.

In South Korea, the New York-based firm has not been a top-tier player in M&A advisory, although through September it ranked 9th worldwide in the value of deals completed this year, ahead of Citigroup (C.N: ).

Lazard, which has a long history of dealmaking, hired the former head of M&A for Korea, Hong Kong and Taiwan at Deutsche Bank in October to bolster its investment banking business.

Lazard’s Korean unit is eyeing cross-border businesses and the renewable energy industry such as solar and wind power, where South Korea is a latecomer.

“Unlike chips and the IT sector, South Korea is a laggard in the renewable energy sector. So we are focusing on that…and I think it is a game that (Korean firms) have a chance to win,” Kwon said.

(Editing by Jacqueline Wong)

Lazard expects more Korea M&A deals next year