Lazard bolstering China unit with M&A drive
Updated: 2011-09-20 11:34
By Wang Xiaotian (China Daily)
BEIJING - Lazard Ltd, a global boutique investment bank, announced on Sept 19 that it will strengthen its business in China to take full advantage of rising cross-border merger and acquisition (M&A) activity related to the world's second-largest economy.
"We believe it's the right time for Lazard to be in China," Kenneth Jacobs, chairman and chief executive officer, said at a news briefing in Beijing.
"As the leading Chinese companies begin to globalize and begin to focus on strategic initiatives, acquisitions and investments abroad, the need for Lazard is greater than in the past," Jacobs said.
Yan Lan, Lazard's managing director in China and head of Greater China Investment Banking, said the company decided to expand its business in China and ramp up its domestic network starting this year to provide Chinese clients with Lazard's extensive international network.
The focus will be on helping Chinese companies extend their overseas business while serving international clients that are preparing to invest in the Chinese market, said Yan.
"We hope to grow with the opportunities. Five years ago, the leading Chinese companies were not very ambitious with regard to their extension plans globally with strategic moves.
"Today, that's increasingly the case. We expect that over the next five years, M&A will become more and more important among Chinese companies," he said.
He said the company hoped to duplicate its success in other emerging markets such as Brazil. He said that the bank will compete with strong investment banking rivals on the basis of intellectual rather than financial capital and relationships with key decisionmakers worldwide.
Economic stress in the United States and Europe won't necessarily lead to a long-term decline in M&A activity, he said.
"Corporate growth is actually still doing quite well in North America and Europe, in part because they did a very good job of restructuring after the last financial crisis, and because they deployed capital into emerging markets."
Jacobs added that economic stress will make it harder for companies to realize organic growth, and that it would lead them to favor M&A over developing their own business in target markets.
Ticonderoga Securities LLC cut Lazard to "neutral" from "buy" on Sept 9, saying US and European debt concerns and tougher regulation of large deals would hurt any recovery in merger activity, Reuters reported.
"While we still expect to see solid second-half advisory revenues for Lazard, it is possible the first quarter of 2012 will now show annual declines driven by the slower pace of merger announcements," the brokerage said in a note to clients.
Lazard entered China in 2001, when it opened its first office in Hong Kong, and it expanded to Beijing in 2006.
Listed on the New York Stock Exchange, Lazard is an international financial advisory and asset management firm that operates across 27 countries in North America, Europe, Asia, Australia, Central and South America.
In 2010, it recorded income of nearly $2 billion. It had 2,332 staff globally as of the end of last year.