No fee too small

30 June 2009 By John Foley Follow @johnsfoley

Korea’s KB Financial decided to switch banks on its $2bn rights issue after a potential lowfee deal with four advisers fell through. Goldman Sachs and Morgan Stanley were content to snap up the barely profitable mandate. Wall Street’s fight for Asian supremacy is getting brutal.

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KB Financial, the parent company of Korea's Kookmin Bank, changed investment banks on its $2bn stock offering after an initial agreement with four Western underwriters collapsed.

JPMorgan, Credit Suisse, Citi and Bank of America had offered to advise on the rights issue for 0.6% of the proceeds, according to people familiar with the situation. However, one of the banks was later unable to get approval, the people say. The delay was partly responsible for KB seeking alternative arrangements.

Goldman and Morgan Stanley agreed to take over the deal for the same 60 basis points, said another person familiar with the situation. The discount at which the initial syndicate had agreed to underwrite the offer is unclear.

The proceeds of equity raisings in AsiaPacific fell 17% in the first half of 2009, compared to the same period last year, according to Thomson Reuters. But the amount raised rose compared to the last six months of 2008 – with rights issue activity more than triple the previous halfyear.

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