SBI, Jefferies to set up funds for Asia, US

Japanese financial services conglomerate SBI Holdings and New York-headquartered securities and investment banking firm Jefferies Group, have agreed in principle to establish two new private equity funds targeting investments in Asia and the US.

The two firms will set up jointly capitalised fund management companies to manage each fund, SBI Holdings said in a statement. The funds will initially only be seeded with commitments from the two sponsors and at this point, there are no plans to raise capital from third party investors, an SBI Holdings spokesman said.

The Jefferies-SBI USA Fund, which will be focused on investments in the US, will have a commitment of about $150 million, with each sponsor committing half the amount. The fund will invest in unlisted companies in the US and will utilise the experience of the Jefferies Capital Partners management team in investing in US middle market companies, the firm said. The fund will be the first in a series of similar funds that will be set up at a later stage.

The SBI-Jefferies Asia Fund, on the other hand, will be a $50 million vehicle with SBI Holdings committing $40 million and Jefferies Group contributing the remainder. The Asian fund will utilise the asset management knowhow that the SBI Group has cultivated in Asia, the firm said. In Asia, the fund will be focused on investments in China, South Asia and Southeast Asia.

In March 2010, SBI Holdings entered into a similar partnership with Brunei Global Islamic Investments, an investment vehicle owned by Brunei Darussalam’s Ministry of Finance, to jointly establish a fund management company in Brunei. That company will manage private equity funds which will make Shariah-compliant investments primarily in Asian companies.

SBI Holdings also plans to raise ¥30 billion (€277.2 million; $338 million) for a second venture capital fund focused on making investments in Asia’s clean technology sector, an SBI spokesman confirmed with sister publication PEI Asia in February. The fund will be raised this year and will target investors such as Singaporean sovereign wealth fund Temasek Holdings and Masdar Clean Tech Fund, a $250 million clean technology-focused fund of funds.

The Japanese financial has a tie-up in India as well, where it manages the ¥10 billion India Knowledge Fund, an equal joint venture with SBI Capital Markets, the investment banking subsidiary of the State Bank of India.

Jefferies Group is a global securities and investment banking firm with offices in more than 25 cities across the world. The firm offers capital markets, financial advisory services, brokerage business for institutional investors, research and asset management services. Jefferies Capital Partners has more than $1 billion in equity funds under management.