Daiwa Securities Group Inc., Japan’s second-largest brokerage, agreed to buy U.S. investment bank Signal Hill Holdings LLC and increase its stake in Sagent Advisors to boost its mergers and acquisitions advisory business in North America.
Tokyo-based Daiwa will pay more than 10 billion yen ($90 million) for the firms, spokesman Hiroki Aoyama said by phone. It plans to merge New York-based Sagent and Baltimore-based Signal Hill at some point under the name DCS Advisory, Daiwa said in a statement.
Daiwa is among international banks that have sought to expand work on takeovers in the U.S., the largest market for dealmaking. Larger Japanese rival Nomura Holdings Inc. is taking a different tack by seeking to hire bankers rather than by making acquisitions. French bank Natixis SA agreed last year to acquire advisory firm Peter J. Solomon.
“Expanding our company’s M&A advisory business continues to be core to our strategic growth,” CEO Seiji Nakata said in the statement. “Cross-border M&A involving Japanese corporates has grown significantly over the past 10 years."
Nakata, who became CEO in April, said in an interview in May that he was looking at increasing Daiwa’s 26 percent stake in Sagent and buying another advisory firm in the U.S.
Overseas operations have recently helped fuel profit at Daiwa. The firm posted its first annual pretax profit abroad in seven years last fiscal year.
The transaction is expected to be completed in the third or fourth quarter of 2017, subject to regulatory approval, according to the statement. DCS Advisory will operate from eight offices in the U.S., including Baltimore, Boston, Chicago, Nashville, New York, Northern Virginia and San Francisco, it said.
Signal Hill and Sagent have more than 100 bankers, Aoyama said. Founded in 2002 by vhairman Scott Wieler, Signal Hill has advisory expertise in the technology, media and telecommunications industries. It has offices in India as well as the U.S. Sagent was founded in 2004 by Herald L. Ritch, the executive chairman. It has offices in the U.S., Europe, Asia and Latin America, according to its website.
The executives for both companies will remain with Daiwa, people familiar with the matter said before the announcement.