(Bloomberg) -- Daiwa Securities Group Inc. plans to hire more bankers, mainly in the US and Europe, to advise on mid-size mergers and acquisitions, as Japan’s second-largest brokerage seeks to build on record income from dealmaking. 

The Tokyo-based firm may recruit “a few dozen” new staff, including managing directors, for its advisory business with a focus on healthcare and financial institutions, Chief Executive Officer Seiji Nakata said in an interview. By boosting its overseas network of about 500 investment bankers, Daiwa hopes to hit its target of earning 50 billion yen ($393 million) annually from M&A advisory in three to five years, he said.  

“We want to seize on the opportunities,” he said. “The world’s fee pool for the merger and acquisition business will probably stay solid over the coming few years.”

The brokerage is also considering acquiring a foreign boutique investment bank to boost its presence in certain sectors such as healthcare, Nakata said, without identifying potential targets. Daiwa is setting its sights on deals involving Japanese companies, as well as mergers between non-domestic firms.

Market Share

Daiwa’s planned expansion is part of its ambition to climb global M&A league tables for deals worth $500 million or less and snatch market share from competitors such as Rothschild & Co. and Houlihan Lokey Inc. The brokerage is aiming to become a top ten adviser, even after slipping eight spots last year to 33rd, according to data compiled by Bloomberg. 

The firm’s revenue from advising on deals surged for the year ended March 31 to a record 35.2 billion yen, or 6% of Daiwa’s overall operating revenue, as the pandemic fueled a global boom in dealmaking. This helped to soften the blow from a drop in income from trading.

At home, Daiwa plans to hire about 200 mid-career professionals this fiscal year, including business planners and salesmen serving retail investors, to balance its more experienced work force, Nakata said. 

“I’m expecting to see a positive chemical reaction,” he said. “That is diversity.” 

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