SMBC, Jefferies to set up JV in Japan: WSJ

SMBC, Jefferies to set up JV in Japan: WSJ

Sumitomo Mitsui Financial Group (SMFG) has initiated discussions to increase its investment in U.S. securities giant Jefferies Financial Group Inc. The goal is to elevate SMFG's stake to 20% from the current 14.5% and establish a joint venture (JV) with Jefferies for investment banking services. This move aims to provide comprehensive financing support for Japanese companies, including initial public offerings (IPOs), both domestically and internationally.

The proposed increase in SMFG's stake will require an additional investment of at least ¥110 billion to acquire the remaining 5.5% of Jefferies' market capitalization, which is approximately $13.7 billion (about ¥2 trillion) . Following this, SMFG subsidiary SMBC Nikko Securities Inc. will form a JV with Jefferies, with SMBC Nikko holding the majority stake.

The new JV will transfer a portion of SMBC Nikko's investment banking business to the joint entity, which will focus on providing financing support services such as IPOs and capital increases through stock issuance. The establishment of the JV and the increase in SMFG's stake will require approval from both Japanese and U.S. financial authorities.

According to the Financial Times, Jefferies is among the top 10 global firms in terms of receiving funds from stock issuance and consulting services for mergers and acquisitions, trailing only firms like Goldman Sachs in the United States . SMFG's decision to strengthen its investment banking business aligns with this strategic partnership.