TOKYO -- As corporate Japan pursues overseas mergers and acquisitions to make up for the shrinking domestic market, it is increasingly turning to foreign-affiliated financial institutions for advice rather than to Japanese domestic brokerages.
Only three Japanese financial institutions ranked among the top 10 M&A advisers in the April-September period. Nomura Securities ranked first by handling the sale of Toshiba's memory unit, climbing to top spot from eighth, with a 33.8% share of the value of deals done.
Mitsubishi UFJ Morgan Stanley Securities, which advised Toshiba suitor, U.S. private equity firm Bain Capital, came third.
SMBC Nikko Securities, a unit of Sumitomo Mitsui Financial Group, came seventh by handling a range of M&A deals.
But most Japanese brokerages lagged behind their foreign peers, which have been effective at gathering information and presenting proposals on the strength of their overseas networks and other expertise. Such networks are a prerequisite to place among top M&A advisers as the number of overseas deals by Japan companies rises.
In April-September, the number of acquisitions by Japanese companies jumped 9% from a year earlier to 1,783. But brokerages' advisory fees fell 18% to about 10.8 trillion yen ($94.6 billion), according to U.S. market research company Dealogic.
Last year's figure was buoyed by SoftBank Group's $32 billion acquisition of British chip designer ARM Holdings. The smaller amount per deal this year indicates that smaller businesses are actively pursuing deals.
Brokerages that worked on Toshiba's 2-trillion-yen chip unit sale topped the list, led by Nomura, with Goldman Sachs Japan in second place.
Nomura is actively handling acquisitions of U.S. companies by Japanese companies, betting the booming U.S. economy will produce higher returns, according to Shinsuke Tsunoda, global head of M&A at Nomura.
Mitsubishi UFJ Morgan Stanley Securities and Credit Suisse Securities (Japan), which advised Bain Capital and South Korea's SK Hynix -- part of the Bain-led consortium in their bid for Toshiba's memory unit -- came third and fourth, respectively.
Mitsubishi UFJ makes use of its partner Morgan Stanley's overseas network "to respond to customer requests and questions quickly and honestly," said Kensaku Bessho, head of the M&A advisory group at Mitsubishi UFJ Morgan Stanley.
SMBC Nikko, which mainly handles smaller businesses, ranked seventh in terms of deal amount, but handled the most deals among the top 10 companies, at 60, up 62% from a year earlier.
SoftBank Group's mega deal propelled Mizuho Securities to first place last year, but the Japanese brokerage did not make the top 10 this year.