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Morgan Stanley has hired virtuoso dealmaker Peter Chu from Goldman Sachs just as banks hustle for the best positions ahead of an expected parade of multi-billion-dollar initial public offerings from the technology, media and telecommunications sector.
Chu, who will join Daniel Wetstein as co-head of Asia Pacific TMT in December, is set to bring with him a wealth of client relationships across the region that could yet give Morgan Stanley an edge in its battle for mandates as activity builds up in the TMT sector.
Companies such as China’s Ant Financial and Lufax, Korean e-commerce leader Coupang and Naver-owned messaging app Line, and India’s e-commerce firm Flipkart have been raising capital privately and all may be heading towards an IPO in the coming few years.
“We continue to be very bullish on our TMT franchise in Asia,” Dieter Turowski, co-head of Asia Pacific investment banking ex-Japan at Morgan Stanley, told FinanceAsia on Tuesday.
“As we look forward to 2016 we see a lot of activity in all three TMT sectors and we believe India and Korea will achieve their potential,” Turowski said.
Chu spent 14 years at Goldman Sachs in various roles, most recently as chief operating officer of Asia-Pacific ex Japan investment banking and head of Asia ex-Japan telecom, media and internet. He will continue to be based in Hong Kong.
At Goldman Sachs he worked on Singtel’s $1.3 billion IPO in 2006, Taiwan's sell down of Chunghwa Telecom’s in a $2.6 billion deal in 2005, Temasek's Shin Corp investment in 2006, and the Hanaro/SK Telecom $1.2 billion merger in 2007.
Chu was also involved in advising Coupang on the sale of a 20% stake to SoftBank this year, according to a person familiar with his experience.
“There is an element of consolidating strength in some places and expanding our footprint in others,” said Turowski.
Opportunities to pick up talent
There have been some management changes at Goldman Sachs of late, including Matthew Westerman's high-profile move to London, which some industry insiders say may have unsettled a few bankers.
In addition, Chu spent time at McKinsey & Company providing corporate finance and strategy advice to Asian TMT clients.
So far this year Morgan Stanley has advised on deals including the $285 million Hong Kong IPO of Imax China, the $1.5 billion private investment in public equity or PIPE for AliPicture in June, the $924 million private placement in Zhong An also in June, and China Unicom’s $34 billion three-way asset sale to China Tower in October.
To be sure investment banking revenues from TMT deals in Asia have dropped to $864 million so far this year from $1.5 billion in the year-ago period, according to data provider Dealogic, but this does not take into account the bumper fees paid on many of the region's privately negotiated rounds of financing.
Some investors and executives have voiced concern this year about a potential bubble forming in the private financing of some fintech companies in China. However, prices have been coming back into line with public valuations of late.
“It’s a good thing pre-IPO valuations are coming down. Frothy private-financing rounds make the next round or the eventual IPO much tougher. Who wants to do a down round [to a lower valuation] ?” said Turowski. “Much better to show steady upward valuations."
Rounding out
Morgan Stanley is rounding out the platform in the region and bringing in external hires selectively.
“We’re not looking to dramatically increase or decrease head count after two years of very high growth … Now it’s all about optimising the team if we see talented people out there,” Turowski told FinanceAsia.
Chu’s defection to Morgan Stanley is precipitating other moves within firm.
Eric Ma will become vice chairman for Southeast Asia, a new position at Morgan Stanley.
Ma has been with the firm since 1993 in various roles across investment banking and research in Singapore, Hong Kong, and Bangkok and has been co-managing the firm’s Southeast Asia investment banking department since 2010, according to recent memos sent out by the firm’s investment banking division sent out mid-November.
A spokesperson for Morgan Stanley confirmed the content of the memos.
Gregory Thiery will become co-head of Southeast Asia investment banking, alongside David Aronovitch who was promoted in 2011.
Thiery is based in Singapore and will take on the management of the region.
Southeast Asia is a complicated region for investment banks, with plenty of franchise risk due to different regulatory regimes and a lack of corporate transparency. So it needs on-the-ground experience.
Aronovitch moved back to Hong Kong around three months ago and also runs consumer, retail and healthcare, and a large portfolio of clients. He maintains client relationships across Southeast Asia.
Thiery joined Morgan Stanley in 1999 as an analyst and has worked in London, New York, and Singapore. He most recently served as Asia Pacific co-head of TMT.
