Mitsubishi UFJ Financial Group Inc. agreed to buy hedge fund administrator Butterfield Fulcrum Group as Japan’s biggest bank seeks to expand fee business overseas.
The lender’s Mitsubishi UFJ Trust and Banking Corp. unit will acquire a stake in Butterfield, which services the alternative asset investment industry, from BV Investment Partners, according to a statement from the seller. Financial terms weren’t disclosed, Butterfield said on its website.
Mitsubishi UFJ is accelerating overseas takeovers to offset muted corporate borrowing and loan profitability in Japan. The Butterfield deal marks the financial group’s first acquisition of a hedge fund asset administrator, according to Yasufumi Tominaga, a Tokyo-based spokesman for the trust bank.
“Hedge fund administration generates higher fees than the comparable business for mutual funds and is a growth area given the new and more onerous filing requirements,” Makarim Salman, an analyst at Jefferies Group LLC in Tokyo, wrote in a report today. “Post-merger they will be adding banking, custody, trust, foreign-exchange and securities-lending services,” said Salman, keeping his buy rating on Mitsubishi UFJ.
Butterfield Fulcrum provides administrative services for more than $100 billion of client assets across 850 funds including hedge funds, fund of funds, private equity and real estate, according to the Bermuda-based firm’s website. It has seven offices in six countries with more than 325 employees.
“The acquisition is in line with our group’s strategy to expand asset management and administration businesses not only in Japan but overseas,” said Tominaga of Mitsubishi UFJ Trust, “It will bring us several billions of yen of profit annually.”
The Nikkei newspaper earlier reported that the amount would be around $30 billion yen ($309 million), without saying where it obtained the information. Tominaga declined to comment on the buyout price.
Most recently, Mitsubishi UFJ announced in April that it will buy $3.7 billion of U.S. real-estate loan assets from Deutsche Bank AG through its San Francisco-based UnionBanCal Corp. to boost commercial lending.
Mitsubishi UFJ’s expansion abroad isn’t without complications. Its Bank of Tokyo-Mitsubishi UFJ Ltd. lending unit agreed to pay $250 million to settle claims it transferred billions of dollars for countries facing U.S. sanctions, the New York State Department of Financial Services and New York Governor Andrew Cuomo said in a statement yesterday.