By Anton Bridge
(Reuters) – Japan’s Sumitomo Mitsui Banking Corp, the banking arm of Sumitomo Mitsui Financial Group, will invest a further 135 billion yen ($912.84 million) in U.S. investment bank Jefferies, the companies said in a statement on Friday.
The investment will take SMBC’s stake to up to 20% from 14.5%, and the two companies will also set up a joint venture in Japan to consolidate their wholesale Japanese equities businesses, the statement said.
The new entity will oversee the firms’ equity capital markets operations, research and sales and trading from a target launch date of January 2027.
SMBC will provide Jefferies with $2.5 billion of new credit facilities to be used for leveraged lending in EMEA and pre-listing lending in the United States, the statement added.
SMFG, Japan’s second largest banking group, started working with Jefferies in 2021 on cross-border mergers and acquisitions and leveraged finance. It first took a stake in 2023, and has since raised it multiple times.
Nothing has been decided with regards to further investment in the future, SMBC executive officer Takashi Morita told a press briefing.
“We believe we have fundamentally established a solid partnership. As for future plans, they remain completely open at this stage,” Morita said
SMBC is not the only Japanese bank to secure a foothold in the U.S..
Larger rival Mitsubishi UFJ Financial Group invested in Morgan Stanley in 2008 and currently holds a 23.62% shareholding, while number three player Mizuho Financial Group acquired U.S. M&A advisory Greenhill in 2023.
(Reporting by Gnaneshwar Rajan in Bengaluru and Anton Bridge in Tokyo; Editing by Kirsten Donovan)
