Daiwa Securities Co. and Sumitomo Bank announced Monday that they will form a joint venture with T. Rowe Price Associates, a major U.S. asset management firm, to offer mutual funds tailored to Japanese customers.
The three parties will create an investment trust management firm by merging three existing firms under the Sumitomo and Daiwa groups — Daiwa International Capital Management Co. (DICAM), SB Investment Management Co. and SBIM Investment Trust Management. The merger is scheduled for April 1.
The new company, tentatively called DICAM SB Asset Management Co., will have 3.3 trillion yen in assets under management. It aims to become a leading asset management company for both retail and institutional investors in Japan, the officials said.
Officials of the firms expressed hope that the venture will thrive in the fledgling investment trusts market in Japan. “In the Big Bang era, it is needless to say that asset management — especially investment trusts — is drawing great interest,” Daiwa Securities President Yoshiya Hara told a news conference at a Tokyo hotel.
The venture firm will be based in Tokyo and capitalized at 2 billion yen. Daiwa and Sumitomo will each own 44 percent of the firm’s shares, with T. Rowe Price taking a 10 percent stake. The remaining 2 percent will be owned by Sumitomo Trust & Banking Co.
Minoru Mori, president of DICAM, will head the firm, and its board will include a member from T. Rowe Price. The tieup deal includes the establishment of another joint venture between T. Rowe Price and Robert Fleming Holdings, a London-based investment banking and asset management firm.
This venture will be created overseas to manage non-Japanese securities portfolios for DICAM’s investment trust products, the officials said, adding that details of the project, including location and the amount of capital, have yet to be worked out.
David Testa, vice chairman of T. Rowe Price, stressed that the venture with Daiwa and Sumitomo will enable his company to gain a footing in the 1.2 quadrillion yen personal finance market here. “Perhaps the single most important element in attracting us to Japan is that it is a single market of a scale that could be found nowhere else outside of the United States,” Testa said. “Over time that market is going to change and shape and create opportunities.”