TOKYO -- Sumitomo Mitsui Financial Group will acquire London-based asset manager TT International, seeking to leverage the company's expertise in emerging-market equities to attract Japanese investors hamstrung by low domestic returns.
The Tokyo-based megabank is expected to spend the equivalent of about 20 billion yen ($188 million) on the acquisition itself, though the total cost could rise as high as 35 billion yen after accounting for performance-based compensation provisions. The transaction is slated to close this fiscal year.
TTI had $8.4 billion in assets under management at the end of July, with about 60% invested in emerging-market stocks in Asia and elsewhere. Its emerging-market funds have mostly outperformed TTI's chosen benchmark, the MSCI Emerging Markets Index, according to the firm's disclosures. Its customers include pension funds in North America and the U.K.
SMFG will offer TTI products to Japanese institutional investors to bolster the group's overall asset balance. With years of ultralow interest rates squeezing returns, the megabank is turning to asset-based fees to generate a reliable stream of revenue.
While TTI will operate separately from SMFG unit Sumitomo Mitsui DS Asset Management, SMFG hopes to have them share expertise through personnel exchanges, for example.
The acquisition follows Mitsubishi UFJ Trust and Banking's roughly $2.7 billion purchase of Commonwealth Bank of Australia's global asset management operations.