Sumitomo Mitsui Trust Bank (SMTB) and Daiwa Securities Group have executed an agreement that will see SMTB acquire the entire share capital of Daiwas custody and fund servicing subsidiaries in the UK and Europe. The acquisition gives SMTB, which offers custody services mainly for clients in Japan, an opportunity to expand into fund services for overseas hedge funds for the first time.
Daiwa Securities Trust & Banking (Europe) (DSTBE) offers custody services mainly for Daiwa Securities Group companies and Daiwa Trust Europe Limited (DSTEL).is an Ireland-based holding company offering fund administration services and trustee services mainly to overseas hedge fund companies.
The acquisition price paid by SMTB is expected to be approximately equivalent to JPY 3.0 billion (24.3 million), based on the related valuation by a third party (it is being estimated that an amount of approximately JPY 1.9 billion will be recorded as goodwill).The acquisition, which is subject to regulatory approval, excludes DSTBEs subsidiary in the US.
SMTB will explore offering clients in Japan overseas asset administration services, including fund administration services, by enhancing the fund service providing functions of the DSTEL Group companies and the existing custody service functions of the SMTB Group companies.
DSTBE comprises GBP 24,999 thousand (JPY 3,053 million) of capital stock) for the fiscal year ended March 2012 the company reported a net income of 500,000 thousand (JPY 61 million), compared to 980,000 (JPY 119 million) for fiscal year ended March 2012. The company has assets under custody of $30,289 million (JPY 2,391.0 billion).
DSTEL reported net income of 150 million (JPY 1,464 million) for the fiscal year ended March 2012, compared to -1,184 million (JPY -115 million). The company has assets under administration of $21,3 billion (JPY 1,680.8 billion).
Subject to regulatory approval and payment of dividends the acquisition is expected to be completed on Nov. 1 2012.
(JDC)