Japanese banking giant fortifies partnership with Jefferies

• Key Insight: A new joint venture is the latest step in Sumitomo Mitsui Banking Corporation's cooperation with — and financial stake in — the U.S. investment firm Jefferies.
• Supporting Data: From 2021 to 2025, SMBC has raised its stake in Jefferies from 4.5% to 20%. 
• Expert Quote: "Our vision is to align SMBC Group and Jefferies in order to offer our clients the best financing and advisory solutions to meet their needs around the world," said Toru Nakashima, the CEO of SMBC's parent company, SMFG.

The bond between Japan's Sumitomo Mitsui Banking Corporation and the investment bank Jefferies just got deeper, sweetened by an almost billion-dollar investment.

SMBC announced on Friday that it's investing 135 billion yen, or $912.84 million, into Jefferies, a U.S. investment firm with which it's been collaborating since 2021. That raises SMBC's stake in Jefferies from 15% to 20%, according to an 8-K Jefferies filed on Friday.

The investment comes with a number of new cooperative efforts between the two firms, including a joint venture focused on Japanese equities, set to begin in 2027. Taken together, Jefferies and SMBC said, the new projects significantly expand their "Global Strategic Alliance."

SMBC is the commercial banking subsidiary of the Sumitomo Mitsui Financial Group, a Japanese financial giant with 264 trillion yen, or $1.8 trillion, of assets. The parent company's CEO, Toru Nakashima, hailed the growing partnership with Jefferies.

"Our vision is to align SMBC Group and Jefferies in order to offer our clients the best financing and advisory solutions to meet their needs around the world," Nakashima said  in a statement. "We are pleased with our progress to date, see today's expansion of our Global Strategic Alliance as a further step in achieving our goal and believe we are early in realizing our joint potential."

Jefferies and SMBC began their alliance four years ago, working together on corporate and investment banking projects that could benefit from a presence in both the U.S. and Japan. Those areas, as the two firms saw it, included financing opportunities in U.S. healthcare and international M&A involving Japanese companies. 

In 2023, the two companies moved to strengthen their collaboration in those areas, particularly with regard to investment-grade American clients.

All the while, SMBC raised its investment in Jefferies. In 2021, the Japanese bank bought up 4.5% of Jefferies' shares. In 2023, it raised that stake to 15%.

"We are grateful to have such a productive relationship with SMBC Group and expect it to produce meaningful results for our clients and shareholders," Jefferies CEO Rich Handler and President Brian Friedman said in a 2024 statement.

This week's announcement takes the partnership a step further. The two firms plan to work together to originate and underwrite loans to clients in Europe, the Middle East and Africa. SMBC will also provide Jefferies with $2.5 billion in new credit resources to support lending in these regions, as well as in the U.S.

In addition, SMBC and Jefferies will begin their new joint venture in Japan. There the two firms plan to combine their efforts in the trading, selling and researching of Japanese equities, starting in January 2027. 

With SMBC's home turf advantage and Jefferies' trading technology, the partners hope to become "the leading provider in wholesale equities and equity capital markets in Japan," according to their statement.

"SMBC Group and Jefferies together are unique in the power of our combined global platforms," Handler and Friedman said on Friday. "From M&A and other strategic advice to balance sheet and capital markets financing to research, sales and trading in the daily capital markets, our combined capabilities offer exceptional value to our clients around the world."