By Makiko Yamazaki and Yuki Nitta
TOKYO, May 20 (Reuters) - Japan's Daiwa Securities Group Inc 8601.T aims to join the top league of investment banks in the merger-and-acquisition (M&A) advisory business by focusing on mid-cap deals, its chief executive told Reuters.
The strategy comes as the second largest Japanese brokerage and investment bank expanded its global networks for the M&A advisory business in recent years though acquisitions and increased its M&A workforce outside Japan to about 500.
Daiwa currently ranks around tenth in M&A advisory for mid-cap deals worth between 50 billion yen and 100 billion yen ($458 million-$916 million), according to the bank.
"We want to bring ourselves to the top tier," Chief Executive Seiji Nakata said in an interview. "We are still far behind top players like Rothschild & Co ROTH.PA and Houlihan Lokey Inc HLI.N, so this is our long-term challenge spanning five to ten years."
Daiwa is focusing on the mid-cap market because of its business potential as the market accounts for more than half of the $32 billion global M&A fee pool, he said. In addition, he said, Daiwa has advantages as many deals involving Japanese companies fall into this category.
For this financial year from April, the bank expects net operating revenue of 30 billion yen from the M&A business, up from 26.7 billion yen a year earlier, Nakata said, pointing to a strong deal flow.
As part of its global investment banking drive, Daiwa plans to start operating its joint venture securities underwriting business in China "as early as in May," he said.
The joint venture with Beijing State Capital Operation Management Center, holding 33%, and Beijing Xi Cheng Capital Holding Co Ltd., holding 16%, will mark Daiwa's return to China after a six-year absence.
($1 = 109.2300 yen)
(Reporting by Makiko Yamazaki and Yuki Nitta; Editing by Stephen Coates)
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