Sumitomo Trust & Banking Co.’s Nikko Asset Management Co. unit agreed to buy DBS Asset Management from DBS Group Holdings Ltd. for 137 million Singapore dollars ($105 million) to tap business from the expanding ranks of wealthy Asians.
Under the accord, DBS Asset will also take a 7.25 percent stake in Nikko Asset and the combined firm’s managed assets will total over $150 billion, the companies said in a joint statement filed to the Stock Exchange of Singapore Monday.
Japanese banks are increasing investment in financial firms abroad to counter slowing lending demand at home. The deal would help Sumitomo Trust increase asset management for Asians outside Japan as the region’s wealth expansion outpaces the rest of the world.
“Asian riches are attracting Japanese lenders for future business growth,” Nana Otsuki, a Tokyo-based analyst at UBS AG, said before Monday’s announcement. “It’s a fee business, which Japanese lenders tend to prefer as it doesn’t require substantial risk-taking.”
The number of millionaires in the Asia-Pacific region reached 3 million in 2009, matching those in Europe for the first time, according to a June report by Capgemini and Bank of America Corp.’s Merrill Lynch unit. Asian millionaires’ assets rose 31 percent to $9.7 trillion, the study showed.
Wealth in the region, excluding Japan, is likely to climb at almost double the global pace through 2014, the Boston Consulting Group said in June.
“By expanding its distribution network and investment platform in Asia, especially in Singapore and Hong Kong, Nikko Asset has taken a major step toward becoming the region’s leading investment manager,” Hitoshi Tsunekage, Sumitomo Trust’s president and chief executive officer, said in the statement.
The tieup will provide an “excellent source of product manufacturing, sales support and training,” said Piyush Gupta, chief executive officer of DBS Group, Southeast Asia’s biggest lender and the parent company of DBS Bank Ltd., which owns the asset management firm.
The combined assets under management that DBS will inject into Nikko Asset totaled $7 billion as of September, according to the statement. The transaction excludes Changsheng Fund Management, which is 33 percent owned by DBS Asset and will be directly held by DBS Group.
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