Nomura to Buy CIBC's American Century Stake for $1 Billion

  • Japanese brokerage seeks to expand into U.S. retail markets
  • Purchase from CIBC to be completed in first half of 2016

Nomura Holdings Inc., Japan’s biggest brokerage, agreed to pay about $1 billion for a 41 percent stake in U.S. money manager American Century Investments.

The purchase from Canadian Imperial Bank of Commerce is expected to be completed in the first half of 2016, Tokyo-based Nomura said Monday in a statement on its website.

Buying the stake would be Nomura’s biggest overseas investment since it acquired Instinet Inc. for $1.2 billion in 2007. The Japanese firm is seeking to expand its capabilities to sell products to pension funds and insurers, and enter private banking and retail markets in the U.S., Chief Executive Officer Koji Nagai said in materials for an investor presentation on Dec. 1.

CIBC agreed in 2011 to buy JPMorgan Chase & Co.’s 41 percent of Kansas City, Missouri-based American Century Investments for $848 million. The money manager was founded in 1958 by the late Jim Stowers Jr. and channels more than 40 percent of its profits to research to help cure genetically-based diseases, according to its website. It had about $141 billion of assets under management as of February 2014.

U.S. Expansion

CIBC, Canada’s fifth-largest lender by assets, has been seeking to expand its U.S. wealth-management business. Chief Executive Officer Victor Dodig earmarked as much as C$4 billion ($2.87 billion) as recently as October for acquisitions of U.S. asset managers and private-banking assets to build on earlier U.S. takeovers including Atlantic Private Wealth Management and American Century, or ACI.

“Recognizing that a path to control was not going to be available over time, we made a decision to work with ACI to monetize our investment," Dodig said Monday in a statement. “Through this divestiture we will further strengthen our strong capital position and we are moving forward with a clear set of strategic priorities to drive our long-term growth."

CIBC said it expects to generate a gain of $170 million from the sale, which will add about 50 basis points to the Toronto-based lender’s common equity tier 1 capital ratio. American Century will continue providing sub-advisory services to several funds and investment portfolios managed by CIBC Asset Management.

Nomura is looking to expand in faster-growing businesses outside of its home country. It bought ING Groep NV’s Taiwanese investment unit last year, becoming the first Japanese asset manager to operate in the market. Nomura also established a fund-management venture with China’s Shenzhen Hua Xia Ren He Capital Management last year.

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