Lai See
PUBLISHED : Tuesday, 19 March, 2013, 12:00am
UPDATED : Tuesday, 19 March, 2013, 4:16am

Slim IPO pickings for Hong Kong investment banks

BIO

Howard Winn has been with the South China Morning Post for two and half years after previous stints as business editor and deputy editor of The Standard, and business editor of Asia Times. His writing has also been published in the Far Eastern Economic Review, the Wall Street Journal, and the International Herald Tribune. He writes the Lai See column which focuses on the lighter side of business.
 

Hopes that 2013 will be a better year for investment banks in Hong Kong have yet to materialise. Indeed, the latest candidates poised for a listing - Sinopec Engineering and China Galaxy Securities - show no signs of yielding the juicy returns that have investment banks salivating and keep them in business. While the banks feel compelled to make an effort, they will earn little or next to nothing. The two mainland firms have continued the practice of hiring oversized syndicates. Hong Kong's biggest initial public offering last year - People's Insurance Company (Group) of China (PICC), which raised US$3.1 billion - featured 17 banks. Last week, Galaxy, which is looking to raise US$1 billion to US$1.5 billion, increased its team of bankers from three to 16 while Sinopec, which hopes to raise US$1.5 billion to US$2 billion, has 10 arrangers, the IFR magazine reports. Sinopec has indicated its underwriting fee will only be about 1.5 per cent, leaving meagre picking for bankers. PICC paid 2.5 per cent, while the Hong Kong tranche of Agricultural Bank of China paid 1.96 per cent and AIA 1.75 per cent plus an incentive fee of 0.25 per cent. IFR adds that those banks agreeing to commit US$50 million will be given a title of joint lead manager, and US$100 million will earn a joint bookrunner title.

 

Nice work

Anthony Nightingale, a former managing director of Jardine Matheson for six years until April last year, has been appointed to the board of British insurance company Prudential as an independent non-executive director and a member of the remuneration committee with effect from June 1. This will be the first time he has taken up a board seat on a listed company outside the charmed circle of the Jardine group, for which he has worked for 43 years. "As a successful business leader, he brings to the board a deep understanding of Asian business at the highest level," said Paul Manduca, Prudential's chairman. Prudential will pay Nightingale £112,500 (HK$1.3 million), which includes a basic fee of £87,500 and £25,000 for his committee role.

 

Hsu says no to social media

These days it's almost a truism that business has to have a "social media strategy". So it's intriguing that Paul Hsu, the founder of food and beverage group Elite Concepts, says he doesn't bother with it. Speaking to the Marketing magazine, he says he has yet to see the value of social media because he is not running a "mass brand" that needs a conversation with everyone. "Guest feedback used to come to us via the chef or comment cards, and we'd know the date and time and what table they came from. With online media, it's almost impossible. There's no validity," he told Marketing. In some circles, this is anathema. "If the 'we are not investing in social marketing' quote is true, then that's a ridiculous statement," Damien Cummings, the regional marketing director of digital and social media at Samsung, said via Facebook. "Clearly, he isn't doing it right." A visit to Elite Concepts reveals the presence of social media icons but they don't respond. Outrageous in this day and age when some people appear at a loss when they don't have the ability to convey their latest thinking, or lack of it, to everyone.

 

Dogged by the whale

JP Morgan chief executive Jamie Dimon last year told employees, according to a profile in Vanity Fair magazine, that the company could put the US$6.2 billion trading disaster, known as the Whale, behind it. "The London Whale drama has been harpooned, beached, eviscerated, cremated and killed. So help me God! It's fish food." That was possibly true until interest was reignited by the report by the US Senate subcommittee on investigations released last week in which the bank was accused of lying to investigators. Accounts were also hidden and trades valued incorrectly to minimise losses. It seems strange that Dimon thought this would go away so easily. This seems unlikely since the Securities and Exchange Commission, the Federal Bureau of Investigation and Britain's Financial Services Authority are investigating this. Doubtlessly, the outcome of these probes will be that JP Morgan, as with other banks, is "too big to jail" and it'll be free to go on its way, to dream up new weird and wonderful wheezes for screwing itself and the rest of us.

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