Nomura Holdings Inc., Japan’s largest brokerage, plans to post as many as 15 top recruits to its mergers and acquisitions team in April to meet cross-border deal demand, two people familiar with the plan said.
The college graduates are among 50 hired through a two-year-old elite recruiting program promising triple Nomura’s normal starting salary in an effort to raise the firm’s global investment banking and trading competitiveness, the people said on the condition of anonymity, citing confidentiality. The M&A team has 140 members in Japan.
Nomura, which ranked No. 1 in Japanese takeover advising in 2011, is hiring bankers as it expects cross-border deals to rise this year. The country saw a record $201.3 billion of transactions last year, including 807 Japanese firms that bought businesses abroad, bolstered by a strong yen.
“Our pipeline is pretty strong,” Kentaro Okuda, joint global head of M&A at Nomura, said in an interview on March 19. “We’re keen to meet the demands of Japanese companies trying to acquire overseas assets.”
Nomura’s Tokyo-based spokeswoman Keiko Sugai declined to comment on the hiring plan.
Japanese drugmakers, manufacturers and household product makers are aggressively acquiring assets abroad, Okuda said, without naming any specific company. Okuda also expects Chinese companies to increasingly buy Japanese assets or seek joint ventures.
Pick of the Litter
Nomura is bidding to prevent top students from choosing overseas firms such as Morgan Stanley and Goldman Sachs Group Inc. that often offer higher pay. They’ll be guaranteed a 6.5 million yen ($79,000) salary before bonuses, compared with 2.4 million yen for regular hires, according to Nomura’s website.
The recruitment system was started in 2010 to match pay packages offered by Lehman Brothers Holdings Inc. to graduates in Japan before its September 2008 bankruptcy. Nomura acquired Lehman’s Asian and European units later that year.
Nomura hired 604 graduates last year, 40 of them under the new program, and allocated about five to its M&A team. Global investment-banking candidates under the new program were required to score more than 860 on the Test of English for International Communication. About 2 million Japanese annually take the TOEIC exam, which has a maximum score of 990.
Companies in Japan offer jobs to university students as early as a year before graduation. The academic year ends on March 31 and new recruits start work on the following day.
Okuda, who is being promoted to senior corporate managing director as of April 1 after capturing Japan’s top advisory ranking for Nomura, is also targeting bankers from rivals to bolster that business, he said. Okuda, 48, will be the company’s youngest executive in that post.
He joined Nomura in 1987 after graduating from Keio University and holds a MBA degree from the Wharton School at University of Pennsylvania. He became global head of mergers in 2008.
Nomura advised on 137 transactions worth $66 billion in 2011, topping Goldman Sachs, according to data compiled by Bloomberg. The New York-based firm led the ranking as late as October after advising on Sumitomo Metal Industries Ltd.’s $22.5 billion merger with Nippon Steel Corp.
Along with its push to take advising market share from global rivals, the Japanese brokerage plans to build up its related consulting business to generate additional fee revenue, Hiroyasu Koike, head of Nomura’s risk solutions department in Japan, said in an interview on March 26. Nomura will also provide other services relating to M&A, including bridge loans and permanent financing, he said.
The country had 2,300 M&A deals in 2011, including overseas acquisitions made by Mitsubishi Corp., Kirin Holdings Co., Terumo Corp. and Tokio Marine Holdings Inc., data compiled by Bloomberg show.
Koike’s group offers risk consulting tailored to specific deals, including advice on currency hedging for cross-border transactions, and last year was involved in half of Nomura’s outbound Japan advisory deals. He’s seeking to win business from all the firm’s international deals in 2012.
Nomura was the No. 3 adviser for cross-border acquisitions by Japanese companies last year, working on 26 deals worth $23.4 billion, Bloomberg data show. So far this year, Nomura ranks second with four deals valued at $4.3 billion. JPMorgan Chase & Co. is No. 1.
“We are aiming to offer our clients total solutions for their M&A activities, from the choice of an acquisition target to financing in the equity or bond markets as well as risk control in the post-merger period,” Koike said.