Japan's Nomura to Buy Instinet, In Effort to Expand Overseas [WSJ]
By YUKA HAYASHI
November 2, 2006 7:53 a.m.
TOKYO -- Nomura Holdings Inc. said Thursday it has agreed to purchase electronic stockbroker Instinet Inc. for an undisclosed price, in the latest sign of its revived ambitions to expand overseas.
Nomura, Japan's leading brokerage firm, said it will pay cash to acquire a 100% stake in the New York-based company from majority-owner Silver Lake Partners, a private-equity firm in Menlo Park, Calif. and the current management team of the brokerage house. With the deal, Silver Lake is cashing out of its investment in less than a year; it paid $208 million for Instinet in December last year to its previous owner, the Nasdaq Stock Market.
Instinet executes trades for institutional investors like mutual funds, hedge funds and pension funds. With some 1,500 clients world-wide and the ability to trade on more than 50 securities markets in the U.S., Europe and Asia, Instinet is a leading global agency broker.
The transaction is expected to be completed in the first quarter of 2007, subject to regulatory approvals. Senior management of Instinet, including Chief Executive Edward Nicoll, will continue to run the firm. Mr. Nicoll and some other members of management own a minority stake in the brokerage firm.
Nomura said in a release the acquisition will allow the company to provide a broader array of services to institutional investors, to whom it already provides securities research offerings.
The major acquisition comes as Nomura begins to expand overseas again, aided by a recovery in Japan's stock market in recent years. Nomura, once a major player in financial markets in New York and London, had pulled back drastically from overseas operations during the 1990s, hurt by the slump in the Japanese economy and markets, as well as losses related to the 1998 Russian debt crisis and its U.S. commercial mortgage-backed securities unit.
But as its earnings and stock price improved, the Tokyo company began building back its business overseas recently. In December last year, for example, it bought a boutique investment bank in the U.K. called Code Securities, and in February, bought a stake in Taishin Financial Holding Co., a large Taiwan bank, for $125 million.
The deal also takes place as securities trading becomes increasingly global and a wave of consolidation among securities exchanges in the U.S. and Europe reaches Asia. In late October, the Tokyo Stock Exchange disclosed it had held discussions with the New York Stock Exchange for a possible alliance. Such a move would encourage more companies from the U.S. and Japan to list their shares in both New York and Tokyo, thus making it easier to invest internationally. |
