TOKYO -- Mitsubishi UFJ Financial Group will purchase asset management operations from Commonwealth Bank of Australia, that country's largest bank, in a deal estimated to be worth 328 billion yen ($2.9 billion), the Japanese megabank announced on Wednesday.
Mitsubishi UFJ Trust and Banking, part of the MUFG group, will wholly acquire multiple core subsidiaries from CBA's asset management group, Colonial First State. The deal, one of the biggest overseas asset management buyouts ever by a Japanese financial group, could close as soon as the fall of 2019.
The agreement, which Nikkei first reported earlier the same day, symbolizes the Japanese banking group's effort to shift away from traditional revenue streams, based on corporate loans. Low interest rates, in Japan and around the world, are pushing the group to look for more lucrative alternatives, such as asset management, especially in growing markets in the Asia-Pacific region.
Aging populations in advanced economies and the rising middle class in emerging nations are expected to fuel a surge of investor money. Assets under management in the Asia-Pacific region are on track to grow 8.7% yearly through 2020, outpacing the global rate of 7%, according to PricewaterhouseCoopers.
MUFG's asset management segment, which is chiefly administered by Mitsubishi UFJ Trust, manages about 70 trillion yen of assets. The group said in July that it is Japan's third-largest asset manager, and 39th globally. The deal with Colonial will add roughly 20 trillion yen to its portfolio, putting the group at No. 1 domestically.
The biggest global asset managers control well over $1 trillion in assets, with top-ranked Blackrock managing $6.28 trillion at the end of 2017. Japanese financial groups have fallen behind by comparison, but Mitsubishi UFJ Trust aims to bring its assets under management closer to that threshold in a few years. The Colonial purchase will be the first acquisition toward that goal, and MUFG has a war chest of approximately 1 trillion yen for acquisitions.