Daiwa aims to be among top 5 in global mid-cap M&A advisory

Rothschild & Co SCA

05/06/2023 10:00

By Makiko Yamazaki
       TOKYO, June 5 (Reuters) - Daiwa Securities Group Inc
 8601.T  aims to be among the top five banks in merger and
acquisitions (M&A) advisory services for mid-cap deals by
financial year 2030 as Japan's second-largest brokerage and
investment bank accelerates its global push, its chief executive
said.
    "We are still in an expansion phase right now, where we need
to spend upfront costs to hire more bankers and buy boutique
firms for top line growth," Chief Executive Seiji Nakata said in
an interview.
    The ambition to join the ranks of Rothschild & Co  ROTH.PA 
and Houlihan Lokey Inc  HLI.N  comes as Daiwa last week laid out
its midterm strategy targeting a 50% jump in global M&A advisory
revenue and a 40% increase in banker headcount by the year
ending March 2031.
    Focusing on deals of less than $500 million to avoid direct
competition with top Wall Street investment banks, Daiwa ranked
eleventh in the league table for mid-cap M&A advisory last year,
according to the company.     
    Nakata said the foundation of the business has already been
established and the bank would need to supplement the business
with more bankers and acquisitions of boutiques, mainly in the
United States whose fee pool is the world's largest.
    Daiwa built its footing in cross-border M&A advisory through
the acquisition of the M&A unit of Britain's Close Brothers
Group  CBRO.L  in 2009.
    It bought two boutique M&A advisory firms - Sagent Advisors
and Signal Hill Holdings LLC - in 2017 to beef up U.S.
operations.
    Nakata said Daiwa plans to focus its overseas expansion on
M&A advisory and to hold off from stretching its balance sheet
further for other investment banking areas such as equity
underwriting for now, in contrast with some of its domestic
rivals.
    Mizuho Financial Group  8411.T , for example, is buying M&A
advisory firm Greenhill & Co Inc  GHL.N  in a $550 million deal
to beef up its investment banking business in the United States
on the whole.  

 (Reporting by Makiko; Editing by Jacqueline Wong)
 ((Makiko.Yamazaki@thomsonreuters.com; +81-3-4563-2805;))