Singapore: Nikko Asset Management, the fund management arm of Japan’s Sumitomo Trust & Banking, will buy Singapore’s DBS Asset Management in a deal valued at $105 million as it strives to turn itself into a large pan-Asian fund manager.
Under the terms of an agreement announced on Monday, Nikko Asset will acquire DBS’ asset management arm for S$137 million ($105 million). DBS will use the money received to buy a 7.25% stake in the enlarged Nikko Asset.
DBS will not inject the asset management unit’s 33% stake in Chinese joint venture Changsheng Fund Management into Nikko, the two firms said in a joint statement that confirmed a Reuters report last week.
“The move is aligned with our overall group strategy, which aims to strengthen asset management operations in Asia,” said Hitoshi Tsunekage, CEO of Nikko Asset’s parent company Sumitomo Trust.
DBS said its asset management unit together with its Malaysian affiliate managed $7 billion in assets as of September 2010, suggesting Changsheng had around $13 billion as the Singapore bank had previously said its fund management unit has about $20 billion in assets under management.
“The tie-up with a partner like Nikko Asset, that shares DBS’ deep commitment to Asia, will enable us to build scale, while leveraging DBS Asset Management’s investment and structuring capabilities,” DBS CEO Piyush Gupta said in a statement.
DBS will distribute Nikko Asset’s investment products through its branches in Singapore, Hong Kong and elsewhere in Asia as part of the deal with the Japanese firm.
Changsheng was excluded from the deal as DBS needs the Chinese asset manager to help it capture more yuan-related businesses, the Singapore lender added.
As for Nikko Asset, the purchase of DBS Asset Management will give it a stronger presence in Singapore and Hong Kong as well as a foothold in Malaysia, where the unit has a 30% stake in HwangDBS Investment Management and a 51% stake in an Islamic manager.
The purchase of DBS Asset Management comes less than a month after Nikko announced the purchase of Tyndall Investments from Australia’s Suncorp Metway in a deal valued up to A$128.5 million ($127 million).
Tyndall manages about A$25 billion, most of it in fixed income, while Nikko had about $120 billion as at end September. The Tyndall purchase will provide the Japanese firm with offices in Australia and New Zealand.