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Asia’s lasting (but small) love affair with M&A bankers

M&A activity is looking upbeat of late which seems to indicate that M&A bankers are still pretty desirable, never mind the global market turmoil.

The Wall Street Journal recently reported that Asia Pacific M&A activity has reached US$566.2bn so far this year compared with US$463.6bn in the same period last year. In particular, South East Asia has been very active, with at least three major deals pending. China is another bright spot. Outbound M&A activity from mainland buyers rose 14 per cent in the first half of this year.

A bright pillar

Rafael Brana, associate, Bo Le Associates, sees cross-border deals as one of the “bright pillars” that will continue to increase the need for M&A bankers. He says recruitment demand in H1 was healthy, with a 10 to 20 per cent increase compared with the same period in 2010.

While hiring levels will lessen for the rest of the year, Brana predicts they will rise again come 2012. “Asia is where activity is growing and this will substantiate the call to beef up M&A teams across the region.”

Paul Aldrich, managing partner, financial services, CTPartners, says although investment banking headcounts in the Europe and the US have been cut, “demand for M&A bankers in Asia has been consistently high and is holding up well”.

Although firms will invest cautiously in banking talent over the next quarter, they will want to ensure they have the right products and coverage bankers in place in 2012, especially in China, says Aldrich. “Banks are still keen to secure key hires, but only exceptional candidates with strong relationships that can monetised. Many bankers say they have relationships in China, but only a few are able to convert these into meaningful revenue.”

But still small

That said, the popularity of such bankers has its inherent limitations. M&A traditionally plays a smaller role in Asia than in the West. Christian Brun, partner, Wellesley Partners, says most Asian clients are not predisposed to paying large advisory fees. Asia ex-Japan and ex-Australia teams also tend to be small, with about 10 to 20 people.

“In the US and Europe top M&A teams are regarded as the elite forces of the firm. This is not so in Asia and especially China. In Asia the rockstars bring in IPO mandates, not M&A mandates. It is all a function of revenues associated with the deals,” says Brun.

Who’s wanted?

Brana says M&A bankers in natural resources, consumer retail, general industries and TMT (telecom, media and technology) are especially wanted.

For lateral hires, firms almost exclusively need Mandarin-speaking candidates. Brun says: “It’s a lively market for Chinese M&A, so it’s getting harder to justify hiring M&A bankers that can’t speak Mandarin.”

Aldrich adds: “Chinese talent continues to be in demand, specifically MDs and directors in client-relationship coverage roles in key sectors.”

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