SMB, Jefferies Expand Strategic Alliance, Joint Venture, and Credit Facilities

SMBC Group and Jefferies have expanded their global strategic alliance, combining their equities and ECM businesses in Japan and expanding joint coverage of larger sponsors in EMEA. SMBC will increase its equity ownership in Jefferies to up to 20% and provide Jefferies with approximately $2.5 billion in new credit facilities to support Jefferies and facilitate collaboration efforts. The partnership aims to enhance joint origination, underwriting, and execution of syndicated leveraged finance for clients.

In a significant expansion of their existing partnership, Sumitomo Mitsui Financial Group, Inc. (SMFG) and Jefferies Financial Group, Inc. (Jefferies) have announced a substantial enhancement to their global strategic alliance. This move involves combining their Japanese equities and ECM businesses, expanding joint coverage of larger sponsors in EMEA, and implementing joint origination, underwriting, and execution of syndicated leveraged finance for clients.

The new agreement, which builds upon their initial 2021 alliance, includes a joint venture in Japan to conduct wholesale Japanese equity research, sales, and trading, as well as equity capital markets activities. The joint venture is expected to commence operations in January 2027, integrating with Jefferies’ leading global equities business to provide seamless and consistent service to institutional investors worldwide.

SMBC Group, which includes Sumitomo Mitsui Banking Corporation (SMBC) and SMBC Nikko Securities Inc., will increase its equity ownership in Jefferies to up to 20% through open market purchases and conversions. This increase will be subject to regulatory approvals and will not exceed 5% of Jefferies' voting interest. Additionally, SMBC has agreed to provide Jefferies with approximately $2.5 billion in new credit facilities to support collaboration efforts, including EMEA leveraged lending, U.S. pre-IPO lending, and asset-backed securitization.

The partnership aims to leverage the strengths of both entities, with SMBC’s expertise in the domestic Japanese market and balance sheet strength, and Jefferies’ leading position with global investors and advanced trading technology. This collaboration is expected to make them the leading provider in wholesale equities and equity capital markets in Japan.

The expansion of the alliance will also see SMBC Group and Jefferies offering the combined investment and corporate banking capabilities of both firms to larger sponsor clients in EMEA, further enhancing their joint coverage initiatives.

Toru Nakashima, Director President and Group CEO of SMFG, commented on the expansion: “Our vision is to align SMBC Group and Jefferies to offer our clients the best financing and advisory solutions worldwide. Today’s expansion is a significant step towards achieving our goal and realizing our joint potential.”

Rich Handler, CEO of Jefferies, and Brian Friedman, its President, added: “Together, SMBC Group and Jefferies offer exceptional value to our clients globally, from M&A and strategic advice to balance sheet and capital markets financing to research, sales, and trading in the daily capital markets.”

The new credit facilities, totaling approximately $2.5 billion, will significantly enhance the partnership and enable the firms to deliver exceptional services to their clients.