Daiwa Capital Markets last week laid off three key people in its equity capital markets team in Asia, including the head of ECM for Asia Pacific ex-Japan, Jonathan Orders, sources say. The layoffs, which are said to have affected several other people in the team as well, come after the firm severely trimmed its equity sales and research staff in Asia in the first quarter of this year and raise questions about Daiwa’s commitment to its ECM business in the region.
Some suggest Daiwa has let go of the great majority of a team that consisted of 13 to 15 bankers, but according to one source, the cuts aren’t that extreme and the firm still has a team in Hong Kong and Singapore.
Daiwa, via an external public relations firm, declined to confirm any of the layoffs and also wouldn’t answer any other questions relating to its business in Asia. Daiwa Capital Markets is the investment banking arm of Japanese brokerage and financial services company Daiwa Securities Group.
In addition to Orders, Jackie Chien, who was head of equity syndicate for Asia-Pacific ex-Japan, and Oliver Nighjoy, head of equity-linked for the same region, both left the firm last week.
All three joined Daiwa Capital Markets in the past couple of years as the firm ramped up its investment banking division outside Japan with a stated aim of becoming one of the top investment banks in Asia. Its parent company, Daiwa Securities, outlined an expansion plan for Asia in November 2009, saying it intended to invest ¥100 billion ($1.15 billion at the time) to increase its headcount in the region to more than 1,100 by 2011. By July 2010 it had added more than 100 bankers which brought its total headcount in Asia to approximately 850.
However, Daiwa said late last year that it would cut 500 jobs outside Japan as continued losses forced it to slash costs and scale back its overseas expansion.
Progress in the ECM market has also been slow and since the beginning of 2011 Daiwa has worked on just over a handful of deals, including the first ever sale of Hong Kong depositary receipts by Japanese financial services group SBI Holdings in April last year.
In December last year it was a bookrunner on the IPOs for Beijing Jingneng Clean Energy and China Outfitters, which raised $244 million and $145 million respectively. And a couple of months earlier it was the sole arranger of a $105 million Hong Kong dollar-denominated convertible bond for Rexlot Holdings, a provider of systems, machinery and services for the lottery market in China. This was the first, and so far only, public Asian CB arranged by Daiwa since it bought KBC’s global CB distribution and secondary market platform in July 2010.
In April this year, Daiwa acted as the sole bookrunner for the $70 million IPO of Jingnan Group, a Chinese manufacturer of wires and cables for power transmissions, distribution systems and electrical equipment. And it is also among the 17 banks that are on a “short-list” for a mandate on Chinese insurer PICC’s upcoming IPO in Hong Kong.
Orders joined Daiwa Capital Markets at the end of September 2010 after an investment banking career of almost 30 years in Asia and Europe. He was formerly a managing director in the ECM division at Standard Chartered Bank Hong Kong and, prior to that, spent five years with HSBC in Hong Kong, originally as head of ECM for Asia-Pacific. He has also held senior positions in a similar capacity at NM Rothschild, Credit Suisse First Boston and Baring Brothers.
Just before he joined Daiwa, Orders was working with boutique corporate finance advisory firm Asia Pacific Advisers where he was a managing director.
Chien joined the Japanese firm in June 2011 to head up the equity syndicate desk. She joined after five years on the Asia syndicate desk at Citi. Before that she was with J.P. Morgan in Hong Kong for almost five years, focusing on equity origination.
Nighjoy came on board in April last year. At the time of the hire he had 10 years of equity-linked experience, most recently from Macquarie where he worked for five years as head of equity-linked for Asia. Before that he spent another five years in the Hong Kong CB team at Deutsche Bank. He has also worked with the Australian Securities Exchange.
Nighjoy left Macquarie in 2010 and had some time off from the industry before accepting the job with Daiwa.