Nomura Holdings Inc. is hiring bankers for its mergers and acquisitions business in Japan as a sharp rebound in domestic deal-making vaults the nation’s biggest securities firm to the top ranks of global advisers.
"We’re recruiting people more eagerly than usual,” global M&A head Shunichi Tsunoda said in an interview. Consultations on local deals are up about 30% to 40% from a normal year, with clients seeking advice on "every kind of transaction” during the pandemic, he said.
Japan has driven a global revival in M&A activity in recent months, as the economy shows early signs of a recovery and companies look to reshape themselves for life after the coronavirus. Nomura has worked on mammoth deals including the ¥4 trillion ($40 billion) NTT Docomo Inc. buyout, putting it on course to end the year among the world’s top 10 advisers for the first time, figures compiled by Bloomberg show.
While Tsunoda said there was no numerical target for hiring, Nomura has recently published advertisements seeking M&A bankers in Tokyo, Osaka and Nagoya.
A jump in demand for advice since August probably reflects clients’ decisions to act on plans they developed after the pandemic took hold, Tsunoda said. Companies are seeking input on everything from divestitures to the purchase of competitors and mergers designed to enter different industries, he said.
"We’re at the start of an era” similar to the aftermath of the global financial crisis, Tsunoda said. "Be it a post- or with-coronavirus era, things will change — there should be more industrial reorganization and cross-border transactions.”
Mergers involving Japanese companies have jumped 59% this year to ¥25.9 trillion ($247 billion), according to data compiled by Bloomberg. Nomura is the top adviser on Japan transactions, retaining its lead over Morgan Stanley’s venture with Mitsubishi UFJ Financial Group Inc., the data shows.
Tokyo-based Nomura worked with Seven & I Holdings Co. on its ¥2.2 trillion ($21 billion) deal to buy Marathon Petroleum Corp.’s gas-station business, and Nippon Paint Holdings Co. on its ¥1.2 trillion ($12 billion) tie-up with Singapore billionaire Goh Cheng Liang’s Wuthelam Holdings Pte.
The rush of deals probably helped Nomura’s earnings in the three months ended Sept. 30, according to Bloomberg Intelligence analyst Shin Tamura. "Revenue may improve dramatically,” driven by fixed-income trading and investment banking, Tamura wrote in a note. Nomura is scheduled to report fiscal second-quarter results Wednesday.
With coronavirus cases much lower in Japan than Europe and the U.S., Nomura has been doing deals through a blend of in-person and virtual contact. "Our customers and our team have avoided meeting face to face when there’s no good reason to, which has helped to boost efficiency,” Tsunoda said.
Meeting in person remains effective when "we need to generate impact in a very difficult situation” to propel deal-making, he said. Clients favor such talks when they are about to conclude agreements or if further price negotiations are needed, he added.
"Some clients have a deep-rooted preference for face-to-face conversations,” Tsunoda said. "Just like us, they want to make sure their counterparts understand their thoughts and concerns.”
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