Sumitomo Mitsui Financial Group Inc plans to buy nearly 5% of Jefferies Financial Group Inc shares for $386 million, the U.S.-based company said on Wednesday, as the Japanese firm looks to boost its presence in the United States.
The companies will also form a partnership to seek cross-border M&A opportunities involving Japanese companies, New York-based Jefferies said.
Japan’s second-biggest lender by assets will also provide a $1.65 billion revolving credit facility and a $250 million subordinated loan to support Jefferies’ lending capabilities.
The move is part of SMFG’s effort to create a foothold in the United States where its unit SMBC Nikko Securities has a small presence.
SMFG currently doesn’t have any capital alliance with financial firms in the United States, according to the bank. While its predecessor bank invested in Goldman Sachs Group Inc in 1986, it has already severed the capital tie-up.
In contrast, its bigger rival Mitsubishi UFJ Financial Group Inc invested $9 billion in Morgan Stanley (MS.N) after global financial crisis in 2008. MUFG owns about 20% of the Wall Street bank.
Spurred on by limited business opportunities at home where interest rates are ultra-low and the population is rapidly ageing, SMFG has announced a raft of deals this year – primarily in Asia.
This month, it announced plans to buy a 74.9% stake in Fullerton India for $2 billion.
SMFG also agreed last month to invest in Philippine bank Rizal Commercial Banking Corporation, and in April it said it would invest in Vietnam’s biggest non-bank lender FE Credit.
Source: Reuters.com