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Investment banks jockey for Samsung bonanza

Hong Kong - Investment bankers are jostling to win plum roles from the founding Lee family of Samsung Group, South Korea's top fee-payer, as it prepares to hand the baton to the next generation in a restructuring that could land more than $100m in advisory fees alone.

Foreign and Korean investment banks are bringing in their chief executives and top dealmakers to pitch for a glut of deals as the $407bn Samsung Group untangles an empire that ranges from electronics to financial services.

Banks' top executives have long courted the Samsung Group as it's among Asia's top fee-payers. Citigroup's chief executive Mike Corbat flew to Korea last year to meet with Samsung management, according to a source with direct knowledge of the matter, while last month Asia-Pacific head Stephen Bird travelled to Seoul.

A spokesperson for Citigroup declined to comment.

Now, as the group's restructuring accelerates, Korean and foreign investment banks are assembling large teams, sending their CEOs to pay their dues at Samsung HQ and boosting research coverage of the group to try and win lucrative work from the conglomerate.

"There are potentially hundreds of transactions that can be done to simplify the Samsung group structure," said Shaun Cochran, head of Korea at CLSA, which published a 178-page report on the group on June 16.

As well as untangling the group's complex web of businesses, the restructuring could also ease a potential $6 billion tax bill faced by the Samsung heirs.

Unlike large Western companies that often retain a 'house' bank, bankers say Samsung keeps them on their toes by fostering competition for each and every deal as it believes it gets better service that way.

Since 2010 the group has paid an estimated $167m in fees, the most among Korean corporates and the tenth-highest in Asia outside Japan, according to data from Freeman Consulting. So far this year, it has paid $21m in fees, compared with $13m for all of 2013.

Bankers estimate Samsung could pay more than $100m in fees over the next two years.

With revenues from trading and dealmaking dwindling, global banks in Asia have culled staff and focused on cross-selling to the region's few serial fee payers.

That makes a group like Samsung, whose Samsung Electronics is the world's biggest smartphone maker, a top target for banks. In return, Samsung is a demanding client even by investment banking standards.

"For a one hour meeting with them, we'll do thirty man-hours of preparation so we don't waste their time," said a senior executive at a foreign investment bank in Seoul.

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