Sumitomo Mitsui to Buy Rail Lease Firm From Perella Weinberg

Sumitomo Mitsui Financial Group Inc. (8316) agreed to buy Flagship Rail Services LLC in the U.S. as Japan’s second-biggest bank by market value expands its leasing business abroad.

Sumitomo Mitsui’s lending unit will acquire all of Chicago-based Flagship from Perella Weinberg Partners LP, the Tokyo-based bank said in a statement today, without disclosing the price. The firm will pay between 30 billion yen ($292 million) and 50 billion yen, a person with knowledge of the transaction said, asking not to be identified because the terms are private.

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 railcar leasing company 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 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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