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SMBC, Moelis strengthen alliance

by Laura Board | Published January 18, 2012 at 10:25 AM

Sumitomo Mitsui Banking Corp. on Wednesday, Jan. 18, strengthened the ties between its investment banking unit and Moelis & Co. LLC by announcing plans for SMBC Nikko Securities Inc. to invest $93 million in its New York peer.

The investment will give SMBC Nikko a roughly 5% stake in Moelis, which was founded in July 2007 by veteran banker and CEO Ken Moelis. The investment puts a $1.86 billion price-tag on the whole of Moelis & Co.

SMBC Nikko and Moelis in March last year forged an alliance covering cross-border M&A and other advisory services. The partnership helped Moelis secure a key role alongside SMBC Nikko and Goldman, Sachs & Co. in assisting Osaka Securities Exchange Co. Ltd. on its takeover by Tokyo Stock Exchange Group Inc. The complex transaction, agreed in November, will start late this year with a ¥129.6 billion ($1.69 billion) tender offer by Tokyo Stock Exchange for Osaka.

Sumitomo Mitsui, SMBC Nikko and Moelis said the strengthened pact will give the investment banks new opportunities to assist the long line of cash-rich Japanese companies looking for outbound M&A prospects. Japan was the third-largest source of outbound M&A last year, accounting for $66.6 billion of deals, recent Allen & Overy LLP figures showed.

The agreement comes the day after parent entity Sumitomo Mitsui Financial Group Inc. itself led a Sumitomo group winning the auction for RBS Aviation Capital after offering Royal Bank of Scotland Group plc $7.3 billion. The deal is the largest ever for an aviation leasing company.

"With the prospect of growing cross-border M&A by Japanese companies, the firms believe there is a meaningful opportunity to collaborate even more closely to serve their clients' needs," the companies said.

They noted that the alliance will remain non-exclusive. They expect the SMBC Nikko investment in Moelis to close in mid-February.

SMBC Nikko, led by president and CEO Eiji Watanabe, is the product of Sumitomo Mitsui's October 2009 acquisition of Nikko Cordial Securities Co.

Moelis' recent domestic mandates include advising Transatlantic Holdings Inc. in November on a takeover by Alleghany Corp. worth $3.4 billion . The deal, on which Goldman Sachs also advised Transatlantic, came to pass after the New York target rebuffed at least two unsolicited suitors and after its original bid partner Allied World Assurance Co. Holdings AG in September agreed to abandon its offer after opposition from Transatlantic shareholders.

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SMBC, Moelis strengthen alliance

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