Mitsubishi UFJ Targets Asian Unicorns With Debt Fund

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Mitsubishi UFJ Financial Group Inc. is preparing to launch a fund that provides debt financing to Asian startups with the aim of gaining investment banking business through subsequent initial public offerings.

Japan’s largest lender will launch a $ 300 million (34 billion yen) fund early next year after increasing its first joint venture fund earlier this year, chief executive Hironori Kamezawa said in an interview. . It will specifically target so-called unicorns, businesses valued at least $ 1 billion, or those nearing that stage, he said.

“If these companies are successful, they will go public,” he said.

The fund, primarily aimed at companies in the information technology sector, is another demonstration of Kamezawa’s efforts in new territory for its sprawling mega-bank. After taking the helm last year, he has sought to replace physical banking and prioritize areas such as digital lending to generate new avenues of expansion to offset tough growth prospects in Japan. .

Last year, MUFG invested $ 700 million in ride-sharing giant Grab Holdings Ltd. and has entered into a commercial partnership with the Singaporean company. He said Grab’s deal aims to complement its traditional retail banking network in Asia with a digital channel.

MUFG’s goal is not limited to debt financing for these startups. Kamezawa said he hoped MUFG and its alliance partner Morgan Stanley could offer investment banking services when the startups later undergo IPOs.

“We are also considering teaming up with Morgan Stanley to support their IPO process,” he said. “There are such possibilities if the Asian fintech industry continues to grow. “

Kamezawa said its Singaporean joint venture formed last year with Israeli firm Liquidity Capital MC Ltd. had seen strong demand for loans from startups in the region and had been raised to $ 200 million in September. The second fund, launched early next year, will operate on top of that, with Liquidity Capital using its expertise to assess the creditworthiness of target startups.

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