Japan’s Sumitomo Mitsui Financial Group plans to invest more than ¥120 billion ($810 million) in US investment bank Jefferies Financial Group, raising its stake to 20% from the current 14.5%, Nikkei reported.
The investment represents SMFG’s latest attempt to bolster its global investment banking capabilities through its partnership with Jefferies, which began in 2021. The two firms will establish a joint venture in Japan focused on mergers and acquisitions advisory services and fundraising support, requiring a restructuring of SMFG’s securities operations.
The deal underscores the challenges facing Japanese banks as they seek to compete internationally. SMFG has struggled to gain traction with US corporate clients, particularly in equity underwriting, prompting the bank to lean on Jefferies’ established relationships and deal-making expertise.
Jefferies shares have surged 54% this year, making the US firm an increasingly expensive acquisition target. The investment bank’s valuation has grown substantially since SMFG first took a stake, raising questions about the timing and cost-effectiveness of further investment.
The partnership expansion comes as SMFG seeks to diversify revenue beyond Japan’s mature banking market. However, the bank’s heavy reliance on external partnerships to build its global presence highlights the difficulties Japanese lenders face in organic international growth.
Previous collaborations between the firms have focused primarily on debt capital markets and advisory services in the US market.
