Japanese banks seek M&As overseas

MUFG has spent a billion dollars buying a stake in fintechs.

Japan’s biggest banks pursued mergers and acquisitions (M&A) of local and foreign fintech firms in the second half of 2024 in search of better revenue, as the yen sank to a 34-year low amidst relaxed regulations.

In November 2024, MUFG announced its bid to acquire all common shares of WealthNavi, Japan’s biggest wealth management robo-advisor with more than $8.6b (JPY1.3t) in assets under management, for about $661.85m at an 89% premium.

Three months earlier, MUFG bought an 8% stake in Globe Fintech Innovations, the operator of Philippine e-wallet giant GCash, for $393m. Its investment helped push up the valuation of GCash — the Philippines’ largest e-wallet with over 80 million users — to $5b.

In June, MUFG served as the lead investor in Thai fintech unicorn Ascend Money’s $195m fundraising move. MUFG was not the only Japanese megabank involved in stake purchases in late 2024. 

Meanwhile, Mizuho Bank bought a stake in US-based Zap Energy through its innovation unit Mizuho Innovation Frontier. Zap Energy develops fusion power and related technologies, which Mizuho said is “a potential game changer for the clean energy transition.”

The company also bought a nonvoting minority stake in Golub Capital, a private credit lender with more than $70b in capital under management. The stake sale positions Mizuho as Golub Capital’s exclusive distribution partner in Japan for its products, which target retail investors and the ultra-rich.

Japan-linked M&As at four-year high
MUFG and Mizuho joined a wave of Japanese companies looking to expand overseas on the back of market reforms and the search for growth elsewhere as the yen sank to a 34-year low.
Government and market reforms have encouraged a wave of dealmaking in Japan, according to an August 2024 report by J.P. Morgan. Momentum took off after initiatives implemented by the Ministry of Economy, Trade and Industry on corporate takeovers and the Tokyo Stock Exchange, it said.

The volume of M&As linked to the country was up 20% in the first half from a year earlier.
Japan-related deals accounted for more than 20% of Asia’s entire transaction volumes for 2023, the highest in four years, J.P. Morgan said, citing data from Japanese M&A Research Report.

The ministry outlined guidelines to ensure fair and transparent procedures, encouraging boards to enhance corporate value and shareholder interests by considering credible takeover proposals, J.P. Morgan said.

The Tokyo bourse also announced an initiative including guidance for companies to encourage better valuations, asking for stock prices to go beyond a price-to-book ratio of 1. The measure has been widely embraced by Japanese companies, J.P. Morgan said.