Articles/Columns
Sumitomo Mitsui Invests Abroad Twice in the Same Week
In the past week, Sumitomo Mitsui Financial Group (SMFG) has made two overseas investments. According to reports by the Financial Times, SMFG has agreed to acquire RBS (Royal Bank of Scotland) Aviation Capital – the aircraft leasing business, for 7.3 billion USD. According to the FT, SMFG’s aircraft leasing business was ranked 15th in market share and RBS Aviation Capital was ranked 7th at the time of the deal. After the deal is completed, SMFG will become the 4th largest player in this industry by market share. This deal allows SMFG to expand its presence in Europe and also strengthen its capabilities in the increasing aviation markets in Asia. A key point to the deal, according to SMFG, was the expected ROA (return on assets) of 2% versus the current 1% ROA that is the norm for commercial lending in Japan. The SMFG consortium will look to receiving funding support for this acquisition from JBIC (The Japan Bank for International Cooperation) and other financial institutions. In a completely separate deal, just one day later on January 18th, Sumitomo Mitsui Banking Corporation (SMBC) and SMBC Nikko Securities invested 93 million USD into Moelis & Company (a U.S. based global investment bank) to establish a “Strategic Alliance Agreement”. Both sides feel that cross-border M&A activity by Japanese companies will continue to grow, especially with favorable market conditions. These two cross-border investments are signs that the M&A activity among Japanese firms for 2012 will continue to grow from the year before, and that Japanese companies are looking to take advantage of the strong Yen and expand their operations and sales channels in overseas markets. In addition, the Japanese government allocated 7.6 trillion Yen in August 2011 for a cross-border investment fund to combat the appreciation of the Yen by having outbound companies exchange JPY into other foreign currencies (mainly USD) at very low rates to lower the demand and value of the Yen. It seems SMFG is taking advantage of having access to cheap foreign capital and taking the lead for overseas investments.
Source: Yahoo! Finance
（2012/1/20 掲載）