Jefferies Surges on Report of Sumitomo Mitsui’s Plans to Increase Stake

By Sam Boughedda

Jefferies Financial Group Inc’s stock experienced a significant surge on Wednesday afternoon after reports indicated that Japan’s Sumitomo Mitsui Financial is contemplating increasing its stake in the firm.

According to the President and CEO of Sumitomo Mitsui Financial Group, Jun Ohta, the company is exploring the possibility of enhancing its holdings as the two organizations look to broaden their partnership beyond the United States.

Following the news, Jefferies shares rose by approximately 13%, trading around the $38.70 mark, and peaked at $40.80 shortly after the announcement.

Ohta stated that they have "decided to move toward increasing our holdings," though specifics regarding the scale or timeline of the investment were not disclosed. He mentioned that discussions with Jefferies and U.S. regulators would need to take place before finalizing any plans. Ohta expressed hope that the aim would be to elevate Jefferies to an equity-method affiliate status, which would involve owning a stake between 20% and 50%.

In July 2021, Sumitomo Mitsui Financial acquired nearly a 5% stake in Jefferies for around ¥40 billion through its banking operations. The two companies have collaborated in various aspects, such as mergers and acquisitions in the U.S., and have recently sought joint ventures in Europe, with aspirations to expand into Asian markets as well.

This move could significantly bolster Sumitomo Mitsui Financial’s overseas brokerage endeavors.