Alexander discusses Lehman's strategy

Lehman Brothers'' new Asian corporate finance head, Charles Alexander explains his big expansion plans.

What was your role in Europe before Lehman moved you to Asia?

Alexander: If I may, I'll give you a slightly longer, history. I started in investment banking in 1987 when I joined JPMorgan from McKinsey. I spent five years with McKinsey and Company in the 1980s - two of which were in Tokyo. At the time, Japanese clients of McKinsey were interested in what was going on outside Japan, and our international clients were interested on what was happening in Japan - so it was a fascinating time to be one of the few foreigners working in what was basically a Japanese office.

At JPMorgan I spent the first four or five years in M&A in Europe. It was a relatively small business that grew very rapidly, and took market share from bigger competitors, which is a theme I will come back to.

I then built up an emerging markets M&A team, primarily in Eastern Europe. That also got me involved in India, because that was run from London. Then in 1992, JPMorgan set up a JV with ICICI called I-Sec, which was 40% owned by JPMorgan. I went to help run that in 1993 and spent four years in India.

In 1997 I was asked to come and run the non-Japan Asia M&A business for JPMorgan. I moved to Singapore and then to Hong Kong to do that. The Asian crisis occurred. I went back to Europe, joining Lehman Brothers in August 1998.

The first three years were focused around building up M&A coverage for large cap telcos. That was obviously a very exciting opportunity at the time. In 2001 I was asked to co-head the M&A group in London and started broadening out my portfolio of activities. The M&A market in Europe was slow in 2002, picked up in 2003 and 2004 is seeing a more modest pick up. So I have done deals across sectors, with the principal focus in the initial period on telcos.

The purpose of my coming here is to help build the business. That is not just the M&A business, but the whole corporate finance side generally, and do so across the region. We've made important hires such as Zhizhong Yang coming from Morgan Stanley to become head of investment banking for China. We will be building that team further, as well as capitalising on our strong franchises in Korea and Taiwan and looking at opportunities in the rest of the region.

We'll need to bring good ideas to clients. Hong Kong is going to be important to that.

Were you sent to Asia due to your prior experience in the region?

It helps. I'd already spoken to the head of Asia, Jasjit Bhattal, a couple of times about the region and what we might do about India and a couple of other markets. So he knew I was still interested in Asia. Indeed, as the firm was looking to build the business here, my name came up on the radar screen.

Your experience in India must have been a factor, given that India now appears to be doing very well?

Yes, Lehman Brothers was very active in India in the early 1990s in the GDR wave. Since the late 90s, we've not been active in India and it has been an up and down marketplace. Having said that, India has clearly taken another step forward in its development process. It's created world class tech companies and some of its industrial companies now have a new look. So we'll be looking at India's potential.

How would you characterize Lehman Brothers attitude to Asia. After the crisis, the firm seemed to become more of a proprietary trading business focused on trading distressed assets. This may have been profitable, but it was not a "franchise" approach. What's changed?

I don't know that anything has dramatically changed. We look at our Asia business as having been very successful in the last few years. It's been profitable and based on the franchise we have we see opportunities. It is not a radical change but a question of building on the success we have had. We do have great relationships in Korea and Taiwan. We can take what we're good at in Asia, add on what we have been successful at doing globally, and grow the business.

There is a lot of competition out in Asia. What does Lehman Brothers bring to the party?

There is lots of competition everywhere in the world. We have to be smart, creative, and provided we bring ideas and are consistent about developing relationships, we can be successful. We have done this in the US and Europe and been successful here. Recently, for example, we've helped Diageo to sell down its position in General Mills. We worked on that with a combination of bankers, tax and structuring guys, ECM guys and were successful because we came up with a better solution.

As an M&A banker, what's your outlook for M&A in the region?

I am hopeful. I'm cautious because I have been through the M&A market in Europe, which was expected to be a busier market than it has turned out to be. Having only been here a short time, I can see things that may happen among financial institutions, the oil & gas industry, the power industry and maybe in telecoms as well. In essence as companies are increasingly successful in their countries they develop global perspectives which leads them to see the opportunities and drive value through consolidation. That is Asia's M&A potential.

And China?

Our intention with the China business is to build up a good franchise with corporates and financial institutions through advice and capital raising. Nothing would please us more if some of those companies developed plans to build businesses outside China and we could help them do that. Plus we want to serve our US and European clients, and China is on everyone's agenda.

So to get where you want to be with this business you will be doing more hiring?

I won't define specifically our plans, but we are going to grow the business over the coming months.

Lehman has had a strong focus on North Asia. We see tremendous opportunities in this area and we are looking at how we might develop opportunities outside North Asia. We're planning to move people down to Singapore to think about our Southeast Asian strategy.

In the old days when Dan Tyree was running the region, there was a big headquarters in Hong Kong, and then Lehman Brothers became very Tokyo-centric. Are we seeing another build up of a Hong Kong HQ?

Tokyo remains our Asian headquarters. It makes sense from a geographic point of view to have a team in Hong Kong serving the China, Korea, Taiwan (and possibly) other markets. But we are not creating another headquarters.

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