Houlihan Lokey to Form New Partnership in South Korea

Los Angeles-based Houlihan Lokey Howard & Zukin is expected to announce Tuesday that it has bought a 50% stake in an affiliate of a leading South Korean financial firm and is forming a new company there.

The move echoes those already taken by some of Wall Street’s largest financial firms, all of which are attempting to take advantage of opportunities in the distressed Asian marketplace.

Privately held Houlihan Lokey, an investment-banking and advisory firm long known for its expertise in valuing businesses, has in recent years expanded into financial restructurings along with mergers and acquisitions.

It has more than 350 employees in 11 offices and 5,000 clients.

Houlihan Lokey has agreed to partner for an undisclosed sum with Samjong M&A; Finance, an affiliate of Samjong Group, both of which are based in Seoul, to create a jointly owned firm to be called Samjong Houlihan Lokey. The new firm, which would supersede Samjong M&A; Finance, would specialize in financial restructuring services for the many highly leveraged companies in South Korea now suffering because of the Asian debt and currency crises.

“From our point of view, our experience from hundreds of North American restructurings and financial valuations, together with Samjong’s knowledge of the Korean insolvency process, will provide the first locally supported and highly sophisticated financial restructuring services in Korea,” said James H. Zukin, who would serve as chairman of Samjong Houlihan Lokey.

“We can’t do this without them. They need to translate how we do financial restructurings and [apply it] it to the needs of the local market,” Zukin said.

The new partnership would also provide private equity and debt placements to South Korean clients, real estate and financial workout services and also specialized due diligence and analytical support services.

In addition, Houlihan would function as a new bridge between South Korean businesses and Southern California firms that are either owned by South Koreans or are interested in doing business there, Zukin said.

“We are finding that more U.S. investors are looking to partner or buy a majority stake in businesses in Korea,” he said. “We are also working with U.S. firms that are buying out their Korean partners.”

Samjong M&A; Finance, founded in 1997, provides investment banking services in South Korea. The Samjong group of companies has more than 250 employees in that country.

“We are excited to be joining forces with [Houlihan Lokey] as we work together to provide the expertise necessary to stabilize and reshape the Korean economy,” said Young-Gak “Ken” Yun, a Samjong executive who would serve as president of Samjong Houlihan Lokey.

U.S. investment banks see great potential in South Korea, which has begun to overhaul its economy after a collapse last year forced it to accept a nearly $60-billion bailout package from the International Monetary Fund. The economic rebuilding requires many South Korean companies to restructure and find new means of financing.

In September, a subsidiary of San Francisco-based investment bank Hambrecht & Quist bought a controlling stake in one of South Korea’s largest brokerages, Ssangyong Investment & Securities Co. Earlier, H&Q; opened an office in Seoul, its 10th in Asia. Global Wall Street powers such as Merrill Lynch & Co. and Morgan Stanley Dean Witter & Co. already have large presences in Asia and will be tough competitors.

Houlihan Lokey, which was founded in 1970, has completed more than 125 company restructurings in the last decade and provided financial advisory services on more than $8 billion in restructurings in 1997 alone, Zukin said.

It recently advised on the sale of Dep Corp., a Los Angeles-based company best known for its hair-care products. Dep was sold to German conglomerate Henkel for $40 million in cash and $53 million in assumption of debt.

Houlihan will continue to grow its private-placement and merger consulting business as it seeks to become a full-service advisory firm for small and mid-sized companies, said John Mavredakis, managing director of Houlihan Lokey’s corporate finance group. The firm advised on 70 deals this year.

“It’s our goal to be one of the top firms in the nation. We think now is a great time to grow this business and hire,” Mavredakis said. “There’s a lot of good people from Wall Street right now on the street and looking for a job.”

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AT A GLANCE

Company: HOULIHAN LOKEY HOWARD & ZUKIN

Business: Financial restructuring, valuation and investment banking Employees: 350

President: Kit Lokey

Year formed: 1970

Headquarters: Los Angeles

Deals: In 1997, advised on more than $8 billion of completed restructurings and represented 65 clients in announced merger and acquisition deals totaling $34.1 billion. Most recently helped find a buyer for Los Angeles-based Dep Corp., a maker of hair-care products.

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Debora Vrana covers investment banking and the securities industry for The Times. She can be reached by e-mail at [email protected].