The Australian share registry group, Computershare, has finally nailed the Japanese market announcing a three-year joint venture with UFJ Trust Bank. The deal fills a vital hole in Computershare's regional expansion programme, rounding out its Asian business which already covers Singapore, Hong Kong, India and, to a lesser extent, the Philippines and Korea.
The 50/50 joint venture signed with UFJ will come into effect in October this year, following UFJ's mega-merger with Mitsubishi Trust and Banking Corporation.
The entity will provide investor relations and cross border transaction support services to Japanese issuers. It may also offer equity-based employee incentive scheme administration. These services that will become more important as Japan's securities market heads for dematerialization in 2009.
Computershare is keen to expand the relationship further by setting up a transfer agency business in Japan. In announcing the MoU, the company said circumstances might change but that it was hoping for a "significant minority interest" in any transfer agency enterprise, and that both parties can walk away from the current JV if the broader relationship doesn't materialize.
The head of Computershare's Asian business, Stuart Crosby, says he expects the JV with UFJ will make only small revenues in its early stages. "While initial revenues are expected to be less than $10 million a year, the technology, skills and knowledge that will be combined through the joint venture will create a significant market presence in Japan."
UFJ's president, Shintaro Yasuda, says the services provided by the venture will give Japanese companies the ability to beat off tough competition from companies around the world. "We are undergoing a great transformation in the Japanese legal and commercial environment," says Yasuda. "This arrangement is a wonderful chance to develop and grow our services to Japanese issuers."
The MoU comes two weeks after Computershare got approval for its takeover of EquiServe, one of the largest providers of transfer agent and employee stock plan services in the US. The deal, worth about $310 million in cash and stock, gives Computershare access to 1,300 companies having 19 million shareholders.
In Asia, Computershare claims an 80% share of the corporate investor services market in Hong Kong. It has worked on some large transactions, including the Link REIT which attracted 400,000 investor applicants.
In India, the firm says it controls 35% of the investor services market and has a significant mutual fund record-keeping business.