Sumitomo Mitsui to Buy Perella Weinberg Railcar Business

Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second-biggest bank by market value, agreed to buy rail car-leasing company Flagship Rail Services LLC from a unit of Perella Weinberg Partners.

The transaction, valued at $1.1 billion, will probably be completed by the end of the year, pending regulatory approvals, according to a statement today from Perella Weinberg Partners Asset Based Value Strategy. Chicago-based Flagship Rail’s fleet has expanded by more than 50 percent since Perella Weinberg’s unit bought it in May 2011, according to the statement.

Sumitomo Mitsui’s lending unit will probably pay 30 billion yen ($291 million) to 50 billion yen for Flagship, a person with knowledge of the transaction said earlier, asking not to be identified because the terms are private. The Tokyo-based bank didn’t disclose the price in a statement it issued earlier today.

Japanese banks are diversifying their businesses and expanding abroad as a shrinking population and benchmark interest rates near zero constrain loan profitability at home. The takeover of Flagship follows Sumitomo Mitsui’s $7.3 billion purchase of Royal Bank of Scotland Group Plc’s aviation division last year.

The Japanese lender’s Sumitomo Mitsui Banking Corp. unit struck a deal to buy 40 percent of Indonesia’s PT Bank Tabungan Pensiunan Nasional for about $1.5 billion in May.

Mitsubishi UFJ Lease & Finance Co., an affiliate of Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest bank, bought Jackson Square Aviation LLC for about $1 billion in January to add about 70 planes to its commercial-aircraft fleet. Mitsubishi UFJ also offered in July to buy a majority stake in Thailand’s Bank of Ayudhya Pcl for as much as $5.6 billion.

American International Group Inc. sold Flagship’s predecessor to New York-based Perella Weinberg in 2011 as part of the insurer’s efforts to raise cash after receiving a government bailout during the global financial crisis.

To contact the reporter on this story: Monami Yui in Tokyo at myui1@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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