Saturday, June 29, 2013

The rise of boutique financial advisers

From Star Online: Business
29 June 2013

In the local high finance corporate scene, a few boutique advisory firms have been quietly etching a name for themselves, putting together mergers and acquisitions (M&As) and other company restructuring deals.
The names of the owners – who are also the key drivers of these firms - have become household names in the corporate world but outside those circles they are hardly known.
And just like high-flying investment bankers, these specialists earn top dollar for their fees, which average around 1% of the size of the deal they are putting together. That’s a tonne of money, considering that some deals go into the billions of ringgit.

But increasingly, the market is curious about these firms and their head honchos.
At the recently convened EGM of Malaysian Resources Corp Bhd (MRCB) where shareholders were to vote on the merger of their company with Nusa Gapurna Development Sdn Bhd, a shareholder had asked who was Astramina Advisory and what was its role in the deal.
Astramina is one of the top few boutique advisory firms and they were involved in structuring the merger.
The three names that actually topped the list of who’s who is boutique corporate advisory, namely Seow Lun Hoo, a former top gun at the Hong Leong GroupWong Mun Rong, a former employee of Seow who left in 2008 to set her own firm Astramina and ZJ Advisory Sdn Bhd’s Lim Beng Guan, the former CIMB banker who is now the face of ZJ Advisory.
At any point in time, these firms are usually involved in the big deals in town. For example, at the moment, Seow is advising Johor Corp on its restructuring exercises, including the recently-announced partial general offer for its London-listed unit, New Britain Palm Oil Ltd; Astramina’s Wong or Muh Rong as she is better known, has been a key advisor on the Gapurna deal with MRCB; while ZJ is working on an Islamic sukuk transaction totaling some RM2bil.
Seow, who did not reply to questions, is known as the biggest name of all and his firm, Newfields Advisors Sdn Bhd, has been involved in many big corporate deals over the years.
Astramina’s Wong used to work for Newfields. Speaking toStarBizWeek, she says the value proposition of these boutique firms is not only coming up with solutions for clients but also in the ability to see them executed well.
“Conceptualising is always easy, but implementation and completing the deal is another story. Whether it is a RM10mil deal or RM500mil deal, there will be issues along the way and we have to deal with it,” she says.
A good case in point is the very deal she’s working on now – PKNS has thrown a spanner in the works in the MRCB-Gapurna deal.
Poi Koon Hwee, partner in ZJ Advisory says that sound ideas that deliver effective and timely solutions is ZJ’s niche along with a lot of hard work.
“While we believe that the ideas and solutions itself is paramount, we do acknowledge that relationship is key in any transaction. We have over the years, developed close relationships with bankers, corporates as well as other business associates such as lawyers, and auditors,” says Poi.
Wong adds that it is a misconception that boutique firms compete with investment banks (IBs). In fact, they complement one another.
“IBs may not have as much time as we have for some clients. So this is where boutique firms fill the gap. Also as an outsider, we can give independent assessments without the hindrance of legal or regulatory requirements,” she says.
Another smaller player in boutique advisory is Datuk Siow Kim Lun, a former director at the Securities Commission who runs MainStreet Advisers, which specialises in initial public offerings.
“Why would a company want to hire an investment bank as well as another advisory firm? It would need to pay more. So our job is to be there and hold the new companies’ hands, and groom them step by step, before they are ready to go to the IBs,” says Siow.
An investment banker opines that boutique advisory firms both compete and complement IBs at the same time.
“Yes, it is true we don’t have the resources to hold the hands of some of these very green companies. So the boutique firms do that. However, because of the low-cost base of these boutique firms, they also eat into the IBs fees. What’s more, most of these people who start boutique firms are ex-investment bankers,” he says.
Another key aspect of boutique firms is the relationship they have built with certain clients over the years, which is key to them securing their deals.
And as Malaysia’s capital market grows bigger and more mature, it is likely that we will see the continuous rise of these boutique investment firms.

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