Sumitomo Mitsui mulls raising stake in Jefferies to 20%

Sumitomo Mitsui Financial Group is considering increasing its stake in Jefferies Financial Group as the Japanese lender deepens ties with the U.S. investment bank, according to people familiar with the matter.

Tokyo-based Sumitomo Mitsui is in talks to boost its roughly 15% stake in Jefferies, potentially by acquiring preferred stock, the people said, asking not to be identified because the negotiations are confidential. One option under discussion is for Japan’s second-largest bank to invest more than ¥100 billion ($677 million) to raise its ownership to about 20%, one of the people said.

The two firms are also in discussions to merge parts of their equities businesses in Japan, potentially through the establishment of a joint venture between SMBC Nikko Securities and Jefferies’ local operation, the people said.