Jefferies Financial Group, the parent company of Jefferies Group, and Sumitomo Mitsui Financial Group, Sumitomo Mitsui Banking and SMBC Nikko Securities (collectively, SMBC Group) entered into an alliance to collaborate on future corporate and investment banking business opportunities.

Through the alliance, Jefferies and SMBC Group will coordinate across growth areas in the corporate and investment banking business. Jefferies and SMBC Group will, among other things, coordinate efforts in the U.S. leveraged finance business to expand and scale existing offerings; form a global partnership to seek cross-border M&A opportunities involving Japanese companies; and jointly pursue investment banking, capital markets and financing opportunities by leveraging both companies’ respective strengths, initially in the U.S. healthcare sector.

SMBC will also provide financing to Jefferies Finance (JFIN), the leveraged finance underwriting affiliate of Jefferies, to expand JFIN’s and Jefferies’ leveraged finance origination and underwriting efforts, as well as financing to Jefferies Group. SMBC’s financing to JFIN is in the form of a $1.65 billion revolving credit facility and a $250 million subordinated loan to support JFIN’s lending capabilities, and the financing to Jefferies is in the form of a $350 million revolving credit facility.

SMBC Group intends to solidify its relationship with Jefferies by acquiring in the open market up to 4.9% of the publicly traded shares of common stock of Jefferies Financial, reflecting an approximately $386 million equity investment based on the closing stock price as of July 13, 2021, subject to receipt of Hart Scott Rodino clearance.

“We are pleased and excited to enter into this alliance with SMBC Group and to get their support for Jefferies’ continued growth and momentum,” Rich Handler, CEO of Jefferies, and Brian Friedman, president of Jefferies, said in a joint statement. “We believe the alliance will further strengthen our already robust investment banking and capital markets capabilities. We view the alliance as the beginning of a long-term relationship with SMBC Group, and we look forward to many years of partnering on many aspects of our respective businesses to best serve our clients. We are particularly pleased to welcome SMBC Group as our soon-to-be newest shareholder.”

“We are pleased to enter into this strategic partnership with Jefferies to help accelerate the growth of the corporate and investment banking businesses of both institutions and to enhance our clients’ global advisory and product needs,” Jun Ohta, president of SMBC Group, and Yuichiro Kondo, CEO of SMBC Nikko, said in a joint statement. “We look forward to working with Jefferies, which is a global investment banking firm that provides a full range of investment and capital markets products and services and expect great things from the alliance.”

Citi served as financial advisor and Skadden, Arps, Slate, Meagher & Flom served as legal advisor to SMBC Group. Jefferies Group served as financial advisor to Jefferies Financial and Jefferies Group.