Is Japan's Nomura Making a $1B Investment in the Americas?
According to a Nikkei report, Nomura Holdings, Inc. NMR is contemplating the purchase of 41% stake in American Century Investments, a Missouri-based money manager, from Canadian Imperial Bank of Commerce. Notably, the probable acquisition is consistent with Nomura’s focus on expanding its operations in the Americas.
Though the region has been reportedly incurring a pre-tax loss since the past five quarters, Americas continues to generate the largest fee income for Nomura. Notably, for the first six months of fiscal 2015, the region yielded 45% of the company’s total international investment banking sales, and 26% of global market revenues. As such, increased penetration into the region is expected to generate greater revenues for the company.
If the parties manage to strike a deal, Nomura will be able to leverage American Century Investment’s broad U.S.-based sales network to market investment trusts, hosting Japanese and Asian shares, to retail investors in the country.
Per the Nikkei report, the deal will likely be executed in the first half of 2016, representing Nomura’s “full-scale entry into the U.S. investment trust market, the world's largest”. Additionally, the company is expected to add few personnel to the American Century Investments’ board.
More importantly, the deal is approximately valued at $1 billion, making it the largest overseas investment made by Nomura post the 2008 financial crisis.
However, the company has not affirmed any rumors yet. Kenji Yamashita, a Nomura spokesperson in Tokyo, declined to comment. Moreover, a company press release issued on Monday states that “Nomura has not made any announcements in this regard”.
Nomura currently carries a Zacks Rank #3 (Hold).
Better-ranked investment broker stocks are E*TRADE Financial Corporation ETFC, which sports a Zacks Rank #1 (Strong Buy); and Arlington Asset Investment Corp. AI and Evercore Partners Inc. EVR, both holding a Zacks Rank #2 (Buy).
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