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Japanese banks weigh overseas takeovers, partnerships

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Mizuho's preference is deals in private markets, executive

says

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Several rivals including Nomura have struck deals this

year

By Iain Withers and Anton Bridge

LONDON/TOKYO, Aug 25 (Reuters) - Japanese banks Mizuho

and MUFG are targeting buying or partnering

with overseas money managers, they told Reuters, joining other

Japanese financial companies aiming for a larger share of the

global investing market.

Mizuho is prioritising a tie-up with a private asset

specialist in Europe or the United States to give it a foothold

in areas such as the booming credit market or infrastructure

financing, an executive told Reuters.

MUFG, meanwhile, has identified overseas asset management -

particularly in the United States and Europe - as a priority

area for potential deals, the company said.

The banks, two of the largest in Japan, collectively manage

about $1.3 trillion through their asset management arms, largely

for local clients. They declined to comment on whether

discussions with target companies had already taken place and

there is no certainty transactions will happen.

Japan's largest financial groups have become increasingly

acquisitive overseas as they contend with sluggish growth at

home due to an ageing and shrinking population.

The government and regulators are also pursuing reforms

aimed at establishing Japan as a leading asset management

centre, with the relatively stable fee income on offer from

money management proving a key selling point.

Nomura acquired Macquarie Group's ( MCQEF ) U.S. and

European public asset management businesses for $1.8 billion in

April. Insurers Dai-ichi Life ( DCNSF ) and Meiji Yasuda have

also acquired or taken stakes in overseas firms this year.

Mizuho and MUFG's investment divisions - which offer a mix

of passive and actively-managed funds - currently have limited

international operations focused primarily on distributing

Japanese equities funds.

"We definitely are keeping an eye on any potential

opportunities... It might be a partnership, it might be an

acquisition, nothing is decided as of this point," said Oleg

Kapinos, London-based head of global distribution strategy for

Mizuho's investments arm AM One, which manages about $489

billion.

JOINING THE FRAY IN PRIVATE MARKETS

The Japanese companies could face challenges executing

successful deals in an investment industry that has seen many

takeovers go awry. There is also fierce competition for prized

assets in hot sectors such as private markets, where

deep-pocketed giants like BlackRock ( BLK ) are active.

"The buying opportunities are fairly rare and when there is

an attractive asset it is likely to attract a lot of attention,"

Kapinos said.

MUFG Asset Management (MUFG AM) is looking for "attractive

non-organic growth opportunities" alongside growing in the first

place its existing business, a spokesperson said. Just a fifth

of its 120.7 trillion yen ($818 billion) of assets under

management are from outside Japan, the company said.

Duncan Gardiner, head of client relations for MUFG AM in

London, said the company had grown its headcount in the city -

its main international base outside Japan - by more than half to

39 in just over two years.

"As we look to become a more global business, Europe is a

very important starting point for us," Gardiner said, adding it

was also targeting growth via a distribution arrangement with

U.S. bank Morgan Stanley ( MS ) - in which MUFG has a 23.6%

stake.

($1 = 147.5600 yen)