Jefferies Financial Group Inc. jumped by the most in three months after Sumitomo Mitsui Financial Group Inc. agreed to triple its stake in the U.S. investment bank and expand their alliance into additional businesses.
The Japanese bank, which purchased 4.5 percent of the outstanding shares of New York-based Jefferies in 2021, intends to increase that investment to as high as 15 percent, the companies said in a joint statement. They plan to collaborate on future corporate and investment-banking opportunities, as well as in equity sales, trading and research.
“This will allow us to compete even more strongly against the handful of large bank-holding companies that we view as our primary competitors across the globe, and makes us a stronger partner for large public companies,” Jefferies president Brian Friedman said in an interview. “There is virtually no overlap in capabilities or focus. This is complementary on both sides.”
Tokyo-based SMBC Group will be responsible for credit products and debt-capital markets, while Jefferies will cover mergers and acquisitions as well as equity capital markets, according to the statement.
What Bloomberg Intelligence Says:
“Jefferies’ deeper tie-up with SMBC Group should further lift its investment bank’s revenue opportunity, building on the 2021 alliance that sought to bolster cross-border M&A and leverage finance,” says BI analysts Neil Sipes and Alison Williams.
“This is not short-term,” Friedman said. “It’s highly strategic and highly synergistic in terms of the services and combinations of what we can provide our clients.”
Jefferies said it expects to seek approval of the agreement at a special shareholders’ meeting in July. SMBC will also designate a new member to Jefferies’ board.
