NOMURA Holdings Inc, Japan's largest securities firm, plans to raise as much as 50 billion yen (US$495 million) to invest in private equity funds focused on the Asia-Pacific region.
Nomura's private equity advisory unit is meeting with 20 funds in China, 20 in India, 20 in Australia and New Zealand and 30 in Japan, said Junichi Ebata, president of Private Equity Funds Research and Investments Co. Nomura owns 65 percent of the unit, known as PEFRI, which was set up in October 2007.
"Investor demand for private equity investments is increasing rapidly," Ebata, 54, has said in an interview with Bloomberg News. "The US subprime crisis has created uncertainty over traditional assets, and investors are looking for alternatives."
Buyouts announced in Asia this year have jumped 60 percent to about US$16 billion from the same period in 2007, according to data compiled by Bloomberg News. The subprime mortgage meltdown has sent investors fleeing from public markets, creating an opportunity for private equity funds to raise capital, Ebata said.
Juicy business
"It's a juicy business for Nomura," said Yasuo Sugeno, an analyst in the corporate financial strategic department at Daiwa Institute of Research Ltd in Tokyo. "The business will bring commissions and also investment-banking mandates such as advising and underwriting initial public offerings."
The fund will charge investors a management fee of 1.25 percent, and it won't charge a performance commission, Ebata said.
Nomura's shares fell 4.9 percent to 1,483 yen in Tokyo yesterday compared with a 2.53-percent slide for the benchmark Topix index.
Nomura's PEFRI unit will make selections for the 30 billion yen to 50 billion yen fund of funds by June and will start operating it in October, Ebata said.
Nomura's new Chief Executive Officer Kenichi Watanabe, 55, said last month he aims to expand in Europe and Asia and will "take risks" to compete with Wall Street banks even after his firm lost US$1.5 billion on United States subprime-linked investments.
Nomura, Norinchukin Bank Ltd and Development Bank of Japan formed PEFRI to advise professional investors on private equity investments.