Investment giant SMBC increases Jefferies ownership to a potential 20% through a $912 million investment
Sumitomo Mitsui Banking Corp (SMBC) has announced an additional investment of 135 billion yen ($912.84 million) in U.S. investment bank Jefferies. This move is expected to increase SMBC's stake in Jefferies to up to 20%.
The investment, according to analyst Travis Lundy, could help SMBC Nikko, the Japanese bank's securities arm, secure more inbound M&A interest from U.S. financial firms. Lundy also suggests that the alliance could provide SMBC with a potentially much better seat at the table for providing LBO financing.
SMBC and Jefferies have been working together since 2021, collaborating on cross-border mergers and acquisitions and leveraged finance. As part of the deal, SMBC will provide Jefferies with $2.5 billion of new credit facilities for leveraged lending in EMEA and pre-listing lending in the United States.
The new entity, formed from the alliance, is expected to oversee the firms' equity capital markets operations, research, and sales and trading from a target launch date of January 2027. Additionally, the two companies will set up a joint venture in Japan to consolidate their wholesale Japanese equities businesses.
Profit projections suggest that the Jefferies stake will contribute 50 billion yen to SMBC's profit by the fifth year, with an additional 10 billion yen expected to come from the equity joint venture.
It's worth noting that Mizuho Financial Group, another Japanese bank, acquired U.S. M&A advisory Greenhill in 2023, and Mitsubishi UFJ Financial Group invested in Morgan Stanley in 2008, currently holding a 23.62% shareholding. However, this article does not mention any other Japanese banks investing in the U.S. besides Mitsubishi UFJ Financial Group and Mizuho Financial Group.
The article does not provide any information on the specific terms or conditions of Mitsubishi UFJ Financial Group's investment in Morgan Stanley or Mizuho Financial Group's acquisition of Greenhill. Furthermore, it does not provide any details on the impact of these investments on the U.S. financial market or the U.S. economy.
SMBC has confirmed that this investment is not part of any further decided investments in the future. The search results do not provide the name of the analyst who commented on Sumitomo Mitsui Banking Corp's investment in Jefferies.
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