TSE – Nomura, Sparx to Form Company to Invest in Unlisted Firms

Nomura Holdings Inc. is teaming up with Japanese asset manager Sparx Group Co. to form a company that will invest in unlisted companies.

The move is part of Nomura’s efforts to do more business in private markets, where it sees potential for growth. It will also give individuals more opportunities to invest in unlisted firms, Nomura said in a statement on Thursday.

Nomura Chief Executive Officer Kentaro Okuda unveiled plans last May to work more with startups in a bid to bolster return on equity at Japan’s biggest brokerage to as much as 10% in five years. More than 99% of the nation’s companies are unlisted and their financing methods tend to be limited, Okuda said in a presentation last month.

Following an initial period of privately placed investments, the planned firm will be listed on the Tokyo Stock Exchange’s Venture Funds Market. Tentatively named Nomura Sparx Investment Inc., it will have 400 million yen ($3.8 million) in capital, with Nomura holding a 51% stake and Sparx the rest, the statement showed.

Operating the fund will likely bring Nomura various investment banking business in addition to generating commissions from investors, Masahiko Maekawa, the firm’s head of merchant banking, said at a news briefing.

The venture will initially invest Nomura’s own cash plus seed money from institutions, Maekawa said. It expects to list within the next two to three years and eventually boost its size to 100 billion yen or more within 10 years, through additional public offerings.

Led by CEO Shuhei Abe, Sparx was founded in 1989 and became Japan’s first independent asset management firm to list on the Tokyo Stock Exchange’s First Section in 2019.

(Updates with comments from Nomura executive in fifth and sixth paragraphs)