Daiwa Securities to acquire Daiwa SMBC Capital

The Japanese financial services conglomerate has offered ¥3.4bn. for the outstanding shares of Daiwa SMBC Capital, a listed principal investment firm in which it owns a 47% stake.

Japan’s Daiwa Securities Group has launched a ¥3.4 billion ($35 million; €25.8 million) tender offer for the shares it does not own in Daiwa SMBC Capital, a listed firm investing in venture capital and buyouts.

Daiwa currently owns a 46.8 percent stake in Daiwa SMBC Capital and is looking to acquire the remaining 53.2 percent stake. It then plans to de-list the firm.

The company is offering to buy about six million shares for about ¥563 each.

The offer price reflects a 30.3 percent premium on the average closing price of Daiwa SMC Capital’s shares on the Jasdaq Securities Exchange for a one-month period ending 27 April. The offer also represents a 30.6 percent premium on the closing price of the shares on the same date.

Following the completion of the deal, Daiwa SMBC Capital will become a subsidiary of Daiwa Securities. The transaction is expected to close on 18 June 2009.

Daiwa Capital SMBC is a principal investment firm with a focus on venture capital and buyouts. Its venture capital activity is focused on the technology and life sciences sectors while in the buyout space, the firm targets medium-sized businesses, primarily focusing on companies with management succession issues and the non-core businesses of large local conglomerates.

In January this year, Daiwa Securities Group abandoned plans to raise a ¥500 billion private equity fund in partnership with The Blackstone Group, citing a difficult fundraising environment. Shigeharu Suzuki, chief executive officer of Daiwa Securities, told Reuters that Daiwa Securities is now looking to launch its own funds of up to ¥20 billion or ¥30 billion.

In June 2008, Daiwa Securities committed $80 million to Fang Fenglei's $2.5 billion Hopu USD Master Fund I. Daiwa Securities SMBC, an investment banking joint venture between Daiwa Securities and Sumito Mitsui Financial Group, committed $20 million to the same fund.