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Business trends

Nomura overtakes Goldman to be Japan's No. 2 M&A adviser

Mitsubishi Morgan Stanley leads the pack in first half as appetite grows for global deals

Nomura Securities' M&A advisory arm moved to second place from fifth place in industry rankings.   © Reuters

TOKYO -- Nomura Securities came in second for merger and acquisition advisory in Japan in the first half of this year, gaining on top-ranked Mitsubishi UFJ Morgan Stanley Securities, as it cashed in on a period of active buyouts by Japanese companies.

The Nomura Holdings unit handled 54 M&A deals worth a combined 1.83 trillion yen ($17.2 billion), rising from the year-earlier fifth place, Refinitiv data shows. Nomura replaced Goldman Sachs, which fell to third place.

Japanese companies were involved in 8.6 trillion yen in M&A deals in the first half, including Nippon Paint Holdings' 300 billion yen purchase of top Australian paint producer DuluxGroup. While this is down about 70% from a year earlier, when Takeda Pharmaceutical announced a megadeal to buy Irish peer Shire, first-half M&A activity in 2019 far outpaced comparable figures from 2016 and 2017.

"The manufacturing sector, facing significant structural changes, is being forced to resort to M&As," said Shinsuke Tsunoda, head of M&A at Nomura Securities.

Japan now ranks third on the purchasing side of cross-border M&As in the Refinitiv data, behind only the U.S. and France. It is a step down from second place last year, once again owing to the Shire deal. But compared with sixth place in 2017, Japan is demonstrating a renewed appetite for global acquisitions.

Mitsubishi UFJ Morgan Stanley Securities remained the top M&A advisory firm in Japan for the first half, with 36 deals worth a total of 2.93 trillion yen under its belt. The investment house helped wireless carrier SoftBank Corp. turn Yahoo Japan into a consolidated subsidiary. Mitsubishi UFJ Morgan Stanley was also instrumental in MUFG Bank buying an additional stake in Indonesia's Bank Danamon.

With the adoption of the corporate governance code, Japanese corporations "are asking themselves how best can they put their capital to use, and they have become more pro-active toward M&As," said Kensaku Bessho, head of Mitsubishi UFJ Morgan Stanley's M&A advisory group.

Helping to drive this trend is investor activism, which is finally taking root in Japan. Companies "have come to take opinions from investors seriously, and M&As stemming from activism will grow even more," said Koichiro Doi, head of Japan M&A for J.P. Morgan.

Competition for M&A advisory roles is poised to heat up in the second half. 

"There is a limit to how much operational efficiency can be improved, but improvement in capital efficiency, including sales of business units, presents a pathway for Japanese enterprises to survive," said Yoshihiko Yano, head of M&A at Goldman Sachs.

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