Mizuho, MUFG join race by Japan’s banks for money manager deals overseas

[LONDON/TOKYO] Japanese banks Mizuho and MUFG are targeting buying or partnering with overseas money managers, they told Reuters, joining other Japanese financial companies aiming for a larger share of the global investing market.

Mizuho is prioritising a tie-up with a private asset specialist in Europe or the United States to give it a foothold in areas such as the booming credit market or infrastructure financing, an executive said.

MUFG, meanwhile, has identified overseas asset management, particularly in the United States and Europe, as a priority area for potential deals, the company said.

The banks, two of the largest in Japan, collectively manage about US$1.3 trillion through their asset management arms, largely for local clients. They declined to comment on whether discussions with target companies had already taken place and there is no certainty that transactions will happen.

Japan’s largest financial groups have become increasingly acquisitive overseas as they contend with sluggish growth at home due to an ageing and shrinking population.

The government and regulators are also pursuing reforms aimed at establishing Japan as a leading asset management centre, with the relatively stable fee income on offer from money management proving a key selling point.

Nomura acquired Macquarie Group’s US and European public asset management businesses for US$1.8 billion in April. Insurers Dai-ichi Life and Meiji Yasuda have also acquired or taken stakes in overseas firms this year.

Mizuho and MUFG’s investment divisions, which offer a mix of passive and actively-managed funds, currently have limited international operations focused primarily on distributing Japanese equities funds.

“We definitely are keeping an eye on any potential opportunities… It might be a partnership, it might be an acquisition, nothing is decided as of this point,” said Oleg Kapinos, London-based head of global distribution strategy for Mizuho’s investments arm AM One, which manages about US$489 billion.

Joining the fray in private markets

The Japanese companies could face challenges executing successful deals in an investment industry that has seen many takeovers go awry. There is also fierce competition for prized assets in hot sectors such as private markets, where deep-pocketed giants such as BlackRock are active.

“The buying opportunities are fairly rare and when there is an attractive asset, it is likely to attract a lot of attention,” Kapinos said.

MUFG Asset Management (MUFG AM) is looking for “attractive non-organic growth opportunities” alongside growing in the first place its existing business, a spokesperson said. Just a fifth of its 120.7 trillion yen (S$1 trillion) of assets under management are from outside Japan, the company said.

Duncan Gardiner, head of client relations for MUFG AM in London, said the company had grown its headcount in the city – its main international base outside Japan – by more than half to 39 in just over two years.

“As we look to become a more global business, Europe is a very important starting point for us,” Gardiner said, adding it was also targeting growth via a distribution arrangement with US bank Morgan Stanley – in which MUFG has a 23.6 per cent stake. REUTERS