By Kaname Sugimoto and Itsuki Okuda

Yomiuri Shimbun Staff Writers

The depreciation of the yen is unlikely to affect the willingness of Japanese companies to pursue mergers and acquisitions abroad, according to Tsutomu Takemura, who heads investment banking operations at major financial services company Nomura Holdings Inc.

"Many companies have grown accustomed to the (current) environment," he said during an interview with The Yomiuri Shimbun.

Takemura, a senior managing director at the firm, also noted that Japan has become one of the global markets receiving the most attention from investors.

The following is excerpted from the interview.

The Yomiuri Shimbun: Japan's market for mergers and acquisitions is brisk. What's your analysis of the situation?

Tsutomu Takemura: The Japanese stock market and its listed companies have become one of the global markets receiving the most attention from investors. Companies here are driving transformation at a very rapid pace, symbolized by brisk mergers and acquisitions. Furthermore, they're implementing capital policies that support aggressive business management and are raising the necessary capital alongside that. An increasing number of companies are effectively leveraging capital markets to accelerate their growth, which has contributed to the overall vitality of the market.

Over the past three years, there has been a clear change in the level of attention directed at the Japanese market and Japanese companies. When I meet with foreign investors and companies, they ask questions about Japan much more frequently. Many are keen to know what's happening in Japan and how companies here are changing.

Yomiuri: The yen continues to depreciate. Won't that dampen the motivation of Japanese companies to conduct mergers and acquisitions abroad?

Takemura: The appetite for mergers and acquisitions remains strong. It's true that for a certain period, the cost of acquiring overseas companies rose because of the rapid depreciation of the yen. However, with the exchange rate hovering between 150 yen to around 160 yen per dollar, many companies have grown accustomed to the (current) environment.

More important is a change in shareholders' attitudes. In the past, they primarily demanded improved returns. However, more recently, calls for investment in growth sectors have been growing in intensity. In addition to conducting mergers in Japan, Japanese companies are increasingly acquiring industry peers in overseas markets where growth is expected.

Yomiuri: How do you view the presence of activist investors?

Takemura: If we look at investors who seek to engage with companies, there are a certain number of people who have become more sophisticated in both the content and approach of the proposals they make compared to when they first came on the scene. We have seen an increase in cases where (activist) investors have proposed growth strategies aimed at enhancing corporate value rather than just securing shareholder returns, indicating that they're maturing as market participants. It's a positive development that investors and companies are working together through dialogue to move in a better direction. However, there are still investors who focus solely on short-term profits, so it's important to remain vigilant.

Yomiuri: How will Nomura support the growth investments of companies?

Takemura: As an example, we can propose mergers in sectors that need restructuring in Japan, and we can support a company's mergers and acquisitions if it seeks to expand overseas. We also receive requests from overseas companies seeking investments from Japanese firms, so connecting them is another important role we can play.

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This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.

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