Bloomberg News

Nikko Asset Said to Begin Picking Underwriters on Global IPO

July 14, 2011

(Updates with underwriter rankings in seventh paragraph.)

July 14 (Bloomberg) -- Nikko Asset Management Co. this week began choosing lead underwriters for an initial public offering, said three people familiar with the plan, setting up the first debut share sale by a major Japanese asset manager in a decade.

Nikko Asset is preparing to list on the Tokyo Stock Exchange as early as March 31, according to the people. Sumitomo Trust and Banking Co. will sell some of its stake in a global offering, said the people who declined to be identified as the process is private.

Japan’s equity capital market has started to recover after share sales plunged in the wake of the earthquake in March. The Nikkei 225 Stock Average has pared losses since the disaster to about 5 percent from as much as 18 percent, and Japan Airlines Co., Tokyo Metro Co. and Tokyo Stock Exchange Group Inc. are among companies looking to sell shares to the public.

“This deal will provide a litmus test of Japan’s asset management business, and rivals are likely to follow,” said Fumiyuki Nakanishi, senior strategist at SMBC Friend Securities Co. in Tokyo. “By listing, Nikko Asset will improve its visibility in Japan and abroad, making it easier to raise funds and sell its products.”

Nikko Asset will conduct so-called beauty contests this month to select managers for the offering, the people said. The firm’s Tokyo-based spokeswoman Kyoko Wada declined to comment, as did Sumitomo Trust’s Tokyo-based spokesman Yasushi Kojima.

Nomura, Goldman Sachs

Citigroup Inc., which acquired Nikko Asset from Nikko Cordial Corp. in 2008, sold the company to Sumitomo Trust as part of a transaction that valued it at 120 billion yen ($1.5 billion) in October 2009.

Nomura Holdings Inc., Goldman Sachs Group Inc., Citigroup, Daiwa Securities Group Inc. and SMBC Nikko Securities Inc. are among potential bidders to manage the sale, the people said. Nomura was No. 1 underwriter for Japanese equity sales in 2010, according to data compiled by Bloomberg.

Since the earthquake on March 11, 28 Japanese companies sold shares in public offerings worth 240 billion yen in total, In the same period a year earlier, 35 companies sold stock worth 2 trillion yen, according to the data. Goldman Sachs appointed two senior bankers to run Japanese equity and bond underwriting to boost its investment banking business following the quake.

Sumitomo Mitsui Trust Holdings Inc., the parent of Sumitomo Trust, fell 1.4 percent to 284 yen at the close of trading in Tokyo. The Nikkei 225 slid 0.3 percent.

Global Reach

Nikko Asset, founded in 1959, employs 572 staff including 72 fund managers, and has 12.8 trillion yen under management. The investment management firm, run by Chief Executive Officer Timothy McCarthy, has subsidiaries in London, New York, Singapore and Sydney.

In Japan, Nomura Asset Management Co. and Daiwa Asset Management Co. are among investment companies that remain unlisted. Asset manager Sparx Group Co. listed on the Jasdaq exchange in 2001.

“The shares will gain popularity among overseas investors as Nikko Asset operates globally and has opportunities to merge with other asset managers under Sumitomo Trust’s umbrella,” Nakanishi said.

Sumitomo Trust and Nikko Asset agreed to buy DBS Asset Management from DBS Group Holdings Ltd., Southeast Asia’s biggest bank, for S$137 million ($113 million) to tap business from the expanding ranks of wealthy Asians, the companies said in December.

--Editors: Russell Ward, Philip Lagerkranser

To contact the reporter on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net

To contact the editors responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net; Philip Lagerkranser at lagerkranser@bloomberg.net


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