Sumitomo Mitsui to take 5% stake in Jefferies for US$380m: Nikkei

[SYDNEY] Sumitomo Mitsui Financial Group will acquire a stake in Jefferies Financial Group for about US$380 million to bolster its securities business in the US, the Nikkei newspaper reported.

The second-largest Japanese bank will invest about 42 billion yen (S$516.9 million) to acquire a roughly 5 per cent position in the American firm, according to the report, which didn't cite the source of the information.

The tie-up would see Jefferies sourcing and financing deals in the US, while Sumitomo Mitsui will provide financing, the report said.

Both companies will soon announce the deal that will involve the Japanese lender buying Jefferies shares from the market, the Nikkei reported. Sumitomo Mitsui said it is considering a capital tie-up with Jefferies and will make an announcement when a deal has been reached, according to a statement from the bank.

Weak domestic growth prospects have pushed Sumitomo Mitsui to allocate more resources outside Japan in recent years. The lender this month said it's taking a stake in Fullerton India Credit for about US$2 billion and in April agreed to buy a 49 per cent position in Vietnamese consumer lender FE Credit.

Larger rival Mitsubishi UFJ Financial Group bought a US$9 billion stake in Morgan Stanley during the global financial crisis in 2008. The tie-up has seen the two firms collaborate on business including M&A advice.

BLOOMBERG