Sumitomo Mitsui Financial Group Inc. said Thursday it will acquire a roughly 10 percent stake in Japanese internet financial giant SBI Holdings Inc. in a deal worth 79.6 billion yen ($585 million) to strengthen its online brokerage service.
Through the capital alliance, the two financial giants aim to expand their customer base by making use of SMFG's wide customer base, ranging from retail to corporate clients, and SBI Holdings' younger customers.
In a rare deal for a Japanese banking group to acquire a stake in a major online brokerage, the two companies will expand their partnership from their agreement in 2020 to cooperate in the digital field, which included SMFG's acquisition of a stake in one of SBI Holdings' subsidiaries.
In a statement, SBI Holdings said it will issue new shares to SMFG -- the parent of megabank Sumitomo Mitsui Banking Corp. -- through a third-party allotment.
The issuance of shares would boost SBI Holdings' financial footing, after having mobilized large amounts of money including its cash bid last year for Shinsei Bank, a midsize lender which SBI turned into a subsidiary.
The latest deal will allow SBI Holdings to offer internet brokerage services to the customers of Sumitomo Mitsui Banking Corp. and Sumitomo Mitsui Card Co.
SMFG and SBI Holdings said they will also develop a digital financial service that allows users to manage their assets and begin offering it to customers during the current fiscal year through next March.
According to SBI Holdings, its online brokerage SBI Securities Co. has about 8.5 million individual customers, while Sumitomo Mitsui Banking and Sumitomo Mitsui Card have 27 million and 50 million, respectively.
"We want to expand our customer base. I would like for (the two companies) to develop various services together so we can offer a futuristic financial experience," Kazuyuki Anchi, general manager of SMFG's corporate planning department, told a press briefing.
SBI Holdings has been strengthening its tie-ups with regional banks in recent years, aiming to become Japan's "fourth megabank," following Mizuho Financial Group Inc., Mitsubishi UFJ Financial Group Inc. and SMFG.