By Sam Boughedda
Jefferies Financial Group Inc (NYSE:JEF) is up 6% Thursday on the back of news that Japan's Sumitomo Mitsui (NYSE:SMFG) Financial Group has strengthened its partnership with the company and is increasing its equity ownership stake in JEF.
The companies said that as part of the deal, Sumitomo Mitsui Financial Group intends to increase its ownership stake in Jefferies by up to 15% by purchasing shares. It will also designate one Jefferies director once its ownership stake reaches or passes 10%.
"This significant expansion of the alliance will broaden the scope of the collaboration in M&A advisory services and increase the collaboration across the firms' equities and debt capital markets businesses," the companies said in a press release. "The expanded alliance also includes joint coverage of designated investment grade clients that have banking relationships with SMBC and will now have dedicated Jefferies investment banking coverage."
In 2021, SMBC (a subsidiary of Sumitomo Mitsui Financial Group) and Jefferies began working together, with SMBC providing $2.25 billion in financing to Jefferies and purchasing approximately 4.5% of the company.
"We are very excited about this logical and straightforward next step that will allow us to offer more products and services to our existing clients and we will also be able to assist SMBC Group to better serve their client base," Rich Handler, Jefferies' CEO, and Brian Friedman, its President stated. "We believe this is best achieved by aligning our broad investment banking, sales, trading and research capabilities with the significant capital base and world-class capabilities of SMBC Group."