Sumitomo Mitsui Banking Corp (SMBC), the banking division of Sumitomo Mitsui Financial Group, has announced a significant investment in U.S. investment bank Jefferies, amounting to 135 billion yen (approximately $912.84 million). This investment will increase SMBC’s ownership stake in Jefferies from 14.5% to 20%.
In conjunction with this investment, the two firms will establish a joint venture based in Japan, aimed at consolidating their wholesale Japanese equities businesses. This new entity is set to manage a range of operations including equity capital markets, research, sales, and trading, with plans for a target launch in January 2027.
Additionally, SMBC will extend $2.5 billion in new credit facilities to Jefferies to support leveraged lending across Europe, the Middle East, and Africa (EMEA), as well as pre-listing lending initiatives in the United States.
The collaboration between SMBC and Jefferies began in 2021 with a focus on cross-border mergers and acquisitions, along with leveraged finance. SMBC first acquired a stake in Jefferies earlier this year, gradually increasing its investment multiple times since then.
During a press briefing, SMBC’s executive officer Takashi Morita noted that while the partnership has solidified, there are currently no specific plans for additional future investments. “We believe we have fundamentally established a solid partnership. As for future plans, they remain completely open at this stage,” Morita stated.
The move by SMBC aligns with actions taken by other Japanese banks seeking to expand their influence in the U.S. market. For instance, Mitsubishi UFJ Financial Group, Japan’s largest bank, has held a 23.62% stake in Morgan Stanley since its investment in 2008. Meanwhile, Mizuho Financial Group made headlines earlier this year by acquiring U.S. M&A advisory firm Greenhill.
This strategic investment and venture may signify SMBC’s growing ambitions in the international banking landscape, aiming to leverage its partnership with Jefferies to enhance its market presence.
