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Activist Fund Sells Aozora Bank Stake to Daiwa Securities

Daiwa Securities Group Agrees to Buy Stake in Aozora Bank Ltd. from Activist-Linked Fund

Daiwa Securities Group Inc. to Buy Stake in Aozora Bank from Activist-Linked Fund

In a strategic move, Daiwa Securities Group Inc. has announced its agreement to purchase a stake in Aozora Bank Ltd. from a fund with ties to Japan’s most prominent activist, Yoshiaki Murakami. The deal, which has put an end to months-long speculation, will see Daiwa acquiring shares from City Index Eleventh, a fund linked to Murakami and his daughter, Aya Nomura.

The investment by Daiwa is seen as a bold move in an industry where many banks are forecasting record earnings following the end of negative interest rates by the Bank of Japan. Masahiro Yamaguchi, a senior market analyst at SMBC Trust Bank, commented, “As interest rates rise, the banking business is going to become more profitable. From Aozora’s perspective, a stable major shareholder will enhance stability.”

The support from Daiwa comes at a crucial time for Aozora, as the bank looks to craft a new strategy following losses on its portfolio of office property loans in the US earlier this year. The partnership between Daiwa and Aozora will focus on four key areas: wealth management, real estate, mergers and acquisitions, and startups.

Daiwa will pay 2,415.5 yen per share, totaling approximately 27.9 billion yen ($177 million), and its stake in Aozora will rise to 23.95%. This investment comes after Daiwa’s announcement in May of acquiring a stake in Aozora for about 51.4 billion yen, providing the lender with fresh capital after its first loss in 15 years.

Following the news, Daiwa’s shares fell by as much as 2.3% to 1,285 yen, while Aozora’s shares gained as much as 3.7% to 2,465 yen. Additionally, Aozora will appoint a candidate nominated by Daiwa to the board as an outside director.

The alliance between Daiwa and Aozora is expected to bring about positive changes for both companies and could potentially reshape the banking landscape in Japan.


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