SYDNEY Mitsubishi UFJ Trust and Banking Corporation (8306.T) will buy a 15 percent stake in the funds management unit of Australian wealth manager AMP Ltd (AMP.AX) for A$425 million ($434 million), as it pushes to expand its global asset management business.
The move will also gives AMP Capital, which has $94.5 billion funds under management, a deep distribution network for its products in Japan and Mitsubishi UFJ a toe hold in the $1.4 trillion Australian wealth management sector, the world's fourth largest.
The deal values AMP capital at A$2.83 billion, or 3 percent of its funds under management, which it at the top end of recent deals valuing funds between 1-3 percent of assets under management.
AMP shares climbed as much as 4.6 percent in early trade in a weak broader market , before trimming gains to trade up 3.2 percent by 2338 GMT.
Mitsubishi UFJ has an option to raise its stake to 20 percent and the deal follows rival Nikko Asset Management's acquisition of fixed income manager Tyndall Investment last year.
Analysts and investors said AMP's strong brand name and investor base generating steady fees was the main reason for the high valuation.
Under the deal, Mitsubishi UFJ will distribute AMP Capital's products to Japanese institutional investors.
"For AMP the deal underpins their desire to try and buy into Asian growth," said Angus Gluskie, Chief Investment Officer at White Funds Management, which owns AMP shares.
"Mitsubishi gets access to the AMP brand and products," he said, adding the pricing should be read in the context of the distribution relationship and the growth that it can bring.
Mitsubishi UFJ has access to 80 per cent of Japan's institutional investors, 14 per cent of retail and high net worth banking networks and 100 retail securities brokerage branches, AMP Capital said.
A report in the Nikkei Japanese business newspaper said the alliance would lift the Japanese firm from 16th place to 11th worldwide in assets under management.
The investment is part of the Japanese bank's push to expand its asset management business overseas, the newspaper said.
"Our alliance with MUTB will accelerate AMP's growth into the Asian region through our investment management business, will," AMP Chief Executive Craig Dunn said in a statement.
AMP Capital sourced 9 per cent of its assets under management from Asia as at end June, it said.
($1 = 0.9792 Australian dollars)
(Additional reporting by Mantik Kusjanto in Wellington and Victoria Thieberger in Melbourne; Editing by Ed Davies)