(Bloomberg) — Sumitomo Mitsui Financial Group Inc. has agreed to take a 10% stake in SBI Holdings Inc., cementing an alliance between two of Japan’s most prominent financial firms that will center on digital services.
SBI, which runs Japan’s largest online brokerage, said it will raise 79.2 billion yen ($583 million) from a share sale through a third-party allotment to Sumitomo Mitsui, a regulatory filing showed Thursday.
The investment will help SBI shore up capital after buying stakes in several domestic lenders under Chief Executive Officer Yoshitaka Kitao. For Sumitomo Mitsui, Japan’s second-largest bank, the deal will allow it to tap SBI’s younger clients and digital expertise.
The alliance will focus on providing online financial services for individuals including younger and mass-affluent customers, SBI said in a statement. The brokerage will use the funds to repay loans and enhance its fundraising base, which in turn will boost its capacity to do more mergers and acquisitions.
SBI said the companies may pursue opportunities to expand and deepen their collaboration in a wide range of business areas in the future.
SBI is issuing the shares at 2,950 yen apiece, a 14% premium over the closing price on Wednesday. The stock rose 0.7% to 2,605 yen on Thursday, paring this year’s decline to 17%.
The Tokyo-based companies agreed on a capital and business tie-up in 2020, involving cooperation by units in digital and other fields. The firms have also invested in the Osaka Digital Exchange, a new proprietary trading platform that’s set to open this month.
SBI has been expanding its banking operations by purchasing stakes in Japanese regional lenders. It took control of mid-sized commercial lender Shinsei Bank Ltd. last year.
Sumitomo Mitsui has also made a string of acquisitions, particularly in Asia. Speaking in an interview late last year, Chief Executive Officer Jun Ohta said he would weigh more transactions in the future after spending more than $3.3 billion in the region in 2021.
(Updates with details from statement in fourth paragraph)
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