Japanese Houses To Form Asset Management Big-Hitter

Tom Burroughes

14 May 2018

have agreed to merge their asset management entities in an investments powerhouse, in a deal that will conclude next April subject to various approvals.

Sumitomo Mitsui will take a 50.1 per cent stake in the combined company, and Daiwa will own 23.5 per cent, while Mitsui Sumitomo Insurance Company will take 15 per cent, Sumitomo Life Insurance Co take 10.4 per cent and Sumitomo Mitsui Trust Bank, 1.0 per cent, a statement from the firms said last Friday.

The groups have entered a memorandum of understanding to initiate the process.

Sumitomo Mitsui Asset Management had Y11.6 trillion ($106 billion) in assets under management as of December. Daiwa SB Investments managed Y6 trillions of March. The combined company will have more than 1,000 employees, according to Bloomberg.

(Editor's note: If the deal is completed, it means the combined entity will almost in the same bracket as Japan's Nikko Asset Management, which has $211 billion of AuM, according to its website giving data as of 31 December, 2017. The M&A agreement highlights the chase for economies of scale at a time when indexation, costs and other pressures are putting certain asset management houses around the world under pressure.)