MUFG has identified overseas asset management, particularly in the United States and Europe, as a key priority for potential deals.
Japanese banks Mizuho and MUFG are trying to buy or partner with foreign money management companies, after the trend of other Japanese financial companies looking to expand their share in the global investment market.
Mizuho is focusing on tying up with a private asset management specialist in Europe or the United States to establish a foothold in areas such as the booming credit market or infrastructure financing, a Mizuho executive stated.
On the other hand, MUFG has identified overseas asset management, particularly in the United States and Europe, as a priority to have potential deals, according to the company.
Together, these two largest banks in Japan collectively manage around $1.3 trillion through their asset management division, largely for domestic clients. They chose not to comment on whether they had talks with potential target companies, and there is no certainty that any transactions will happen.
Japan’s largest financial institutions are increasingly looking for opportunities in the international landscape as they face sluggish domestic growth due to an aging population and declining birth rates.
The government and regulatory bodies are also pursuing reforms to make Japan a leading asset management centre, with the relatively stable fee income from money management proving to be a key selling proposition.
Nomura bought Macquarie Group’s public asset management divisions in the United States and Europe for $1.8 billion in April. Insurers such as Dai-ichi Life and Meiji Yasuda have also made purchases or investments in international companies this year.
At present, Mizuho and MUFG’s investment divisions, which offer a combination of passive and actively managed funds, have restricted their international operations to focus mainly on distributing Japanese equity funds.
Oleg Kapinos, the London-based head of global distribution strategy at Mizuho’s investment unit, AM One, which manages approximately $489 billion, noted that they are looking out for potential opportunities, whether through a partnership or an acquisition, but have not finalized any at this point.
Japanese companies may face challenges in successfully executing deals in an investment industry where many acquisitions have failed. There is also intense competition for prized assets in booming sectors, including private markets, where significant players such as BlackRock are active.
BlackRock announced that it will buy private credit company HPS Investment Partners for around $12 billion in an all-stock deal, as the world’s largest asset manager aims to expand its reach in a rapidly growing market.
Private credit, or lending to companies by institutions other than banks, has grown rapidly in recent years as stricter regulations have made it more costly for traditional lenders to fund riskier loans.
The asset class is expected to grow from $1.5 trillion at the end of 2023 to $2.6 trillion by 2029, according to Preqin data.
Kapinos noted that buying opportunities are quite limited, and when an attractive asset becomes available, it gets significant attention.
MUFG Asset Management (MUFG AM) is looking for attractive non-organic growth opportunities while also wanting to expand its existing business, according to a spokesperson. The company stated that only a fifth of its 120.7 trillion yen ($818 billion) of assets under management comes from outside Japan.
Duncan Gardiner, Head of Client Relations for MUFG AM in London, mentioned that the company has increased its headcount in the city, where it has its main international base outside Japan, by over 50% to 39 employees in just two years.
Gardiner stated that they are trying to become a global business, with Europe serving as a starting point. They are targeting growth through a distribution partnership with Morgan Stanley, a US bank in which MUFG holds a 23.6% ownership stake.
