Nomura Dealmakers See ESG Focus Boosting M&A Transactions

Nomura Holdings Inc.’s dealmaking team expects more mergers as governments and investors put mounting pressure on companies to improve their standing on environmental, social and governance scores.

“With various nations promoting ESG, the move toward business reorganization will likely gather momentum among relevant sectors,” Shinsuke Tsunoda, global head of mergers and acquisitions at Japan’s largest brokerage, said by email.

With about $4 of every $10 of global equity inflows now heading into ESG funds, there’s a renewed focus among senior managers to improve their firm’s grading. Simplifying businesses or shedding assets to meet climate goals may be one avenue CEOs take in lieu of a takeover with the cost of capital for firms increasingly being linked to ESG performance.

1(1)Goldman Sachs Group Inc.
2(3)Morgan Stanley
3(2)JPMorgan Chase & Co.
4(5)Bank of America Corp.
5(4)Citigroup Inc.
6(7)Credit Suisse Group AG
7(8)Barclays Plc
8(10)Lazard Ltd.
9(6)Evercore Partners Inc.
10(18)UBS Group AG
11(20)Nomura Holdings Inc.

Nomura narrowly missed the world’s top 10 for mergers last year having jumped from 20th place. This year, the firm has slipped back and is currently ranked 25th among global financial advisers, according to data compiled by Bloomberg.

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Tsunoda said he expects more deals by companies seeking to “change the way they do business or the quality of it,” such as making a subsidiary a wholly-owned unit so they can implement change without worrying about minority shareholders. There could also be some large-scale mergers by companies in the same industry, he said. Tsunoda declined to name which sectors might see the rise in M&A activity.

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