Nomura, Left Behind in U.S. Mergers Boom, to Hire Senior Bankers

  • May recruit 20 people in 2016, start covering tech companies
  • Need to build client base, investment banking head says

Nomura Holdings Inc. is seeking to hire about 20 investment bankers in the Americas next year to address concerns that it’s slipping behind in the booming U.S. mergers market.

Japan’s biggest brokerage plans to recruit managing directors and executive directors who have clients in the technology, consumer and health-care industries, said Kentaro Okuda, global head of investment banking. The Tokyo-based firm will start covering the technology industry in the region, he said.

“We haven’t built up enough of a client base in the Americas, and we’re very aware of that,” Okuda said in an interview in Tokyo. He said it was “shocking” to miss out on large takeovers by Japanese insurers in the U.S. this year.

Nomura’s push in the U.S. echoes comments made this week by Deutsche Bank AG co-Chief Executive Officer John Cryan, who said that it would be “inconceivable” not to do business in a country with the biggest fee pool and the deepest capital markets. CEO Koji Nagai said this month that the Japanese firm has room to boost hiring in an effort to double investment-banking revenue in the Americas over the next two or three years.

Okuda said he wants Nomura to advise on acquisitions and restructuring by companies in the consumer industry, such as beverage makers. He’s also seeking to manage initial public offerings by technology companies. Nomura will focus on generating fees from companies with a market value of less than $10 billion, Nagai said in a presentation on Dec. 1.

Record M&A

Mergers and acquisitions in the U.S. reached a record $2.4 trillion this year, up from $2 trillion for all of 2014, according to data compiled by Bloomberg. Nomura was ranked 44th among advisers on the transactions, the same position it held last year, the data show.

“This is the region where Japanese companies are looking at the most for growth, and we’re seeing more cross-border deals in the pipeline,” Okuda said.

Tokio Marine Holdings Inc., Meiji Yasuda Life Insurance Co. and Sumitomo Life Insurance Co. announced acquisitions with a total value of about $16 billion in the U.S. this year, and Nomura was absent from all three deals.

“We were beaten in the region where we’re always beaten,” Okuda said, referring to the U.S.

Hired Bankers

At home, the brokerage is No. 2 financial adviser for mergers and acquisitions this year, data compiled by Bloomberg show. Yet it’s only ranked fifth for cross-border transactions involving Japanese companies, trailing global firms Morgan Stanley, Goldman Sachs Group Inc. and JPMorgan Chase & Co., according to the data.

Nomura said in November that it hired six investment bankers in the Americas, including Mark Connelly as head of equity capital markets. The firm is also adding junior staff, recruiting more than 30 graduates in New York this year, Okuda said. In Tokyo, the brokerage added at least 10 M&A bankers this month by transferring employees from other departments to cope with an increasing number of deals in Japan, he added.

The company has been adding staff in the U.S. while trimming headcount in Europe. Nomura had 2,514 employees in the Americas as of Sept. 30, up almost 4 percent from a year earlier. The number in Europe fell by 1 percent to 3,494 over the same period, earnings materials showed in October.

Nagai’s efforts to expand in the U.S. have yet to pay off, with Nomura posting pretax losses from the Americas in each of the five quarters to Sept. 30. The firm, which is seeking to earn 50 billion yen ($411 million) from operations abroad in the year ending March, lost 43 billion yen overseas before taxes in the first six months after settling a legal dispute with an Italian bank.

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