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September 11, 2009

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Daiwa to buy out JV partner

DAIWA Securities Group said it would pay about US$2.2 billion to buy out Sumitomo Mitsui Financial Group from their investment banking joint venture, leaving Daiwa vulnerable amid keen competition for deals in Japan.

Daiwa, Japan's second-largest brokerage, said it would likely buy SMFG's 40 percent stake in their 10-year-old venture, Daiwa Securities SMBC, making it a wholly owned subsidiary.

The deal was widely expected after reports by Thomson Reuters and other media last week.

The fate of the partnership had been in doubt since SMFG agreed earlier to buy Citigroup's brokerage and securities underwriting business in Japan for US$6 billion, some of which overlapped with the Daiwa venture.

SMFG had been talking with Daiwa for a majority stake in the venture and to merge its operations with the wholesale businesses bought from Citigroup.


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