Baker McKenzie advised Daiwa Securities in its US$120 million investment in Global X Management, a US-based issuer of exchange traded funds (ETFs). The transaction, structured as a convertible bond, gives Daiwa Securities the option to convert to a minority equity stake in Global X in five years.
The collaboration enables Global X to offer differentiated ETF solutions for its Japanese investors, while Daiwa provides strong support “from savings to asset building”, in a move to tap into the rapidly growing market for ETFs. This low-cost, highly liquid investing option has gained popularity worldwide. However, even though Japan’s ETF market is the third-largest in the world, ETF adoption remains in its early stages.
The deal also solidifies the relationship between the two companies, which formed a joint venture, Global X Japan, last year to deliver intelligent investment solutions to Japanese investors. It aims to list Japanese-stock ETFs on the Tokyo Stock Exchange by mid-2020.
The Baker McKenzie team was led by Steven Canner, Andrew Sagor, Airi Hammalov, Santiago Corcuera, Andrew Cohen (in New York); and Toshio Ibaraki, Kana Itabashi and Satoshi Abe (in Tokyo).
Japanese investment bank Daiwa Securities is the second-largest securities brokerage after Nomura Securities and has been developing products and service platforms for 77 years.
New-York based Global X specializes in ETFs based on specific investment themes. It offered 72 funds at the end of 2019, and had US$12.4 billion in assets under management.