Nomura BlackRock Asset Management, the first money management joint venture between a U.S. and Japanese firm, has quietly unraveled over a conflict resulting from BlackRock Inc.'s acquisition of Merrill Lynch Investment Managers.
The conflict — Nomura Securities Co. Ltd. and Merrill Lynch & Co. are fierce competitors in the Japanese brokerage business — jeopardized the joint venture almost from the moment the BlackRock/MLIM deal was announced, sources said.
"Their brokerage businesses fight like cats and dogs," said one source.
As a result, BlackRock, New York, acquired Tokyo-based Nomura's 50% stake in the joint venture for about $42 million when the MLIM deal closed at the end of September. The joint venture, formed in 1999, had about $10 billion under management. A significant portion of that is in U.S. and global bonds for Japanese institutional investors.
Nomura and Merrill also competed slightly for Japanese asset management business. Now, BlackRock executives expect their firm to become an even bigger player in Japan through the MLIM acquisition.
Because of the competition, BlackRock was left with "one too many bedfellows," said the source, adding that the decision to dissolve the venture was made during the second quarter.
Richard Kushel, managing director and co-head of BlackRock's international distribution and client servicing group, said the split was amicable and "was certainly not the end" of the relationship between the two firms.
BlackRock has rolled the business into BlackRock Japan Co. Ltd., its stand-alone investment management operation in Tokyo, along with MLIM's Japanese asset management operation, creating a firm that manages more than $50 billion in Japanese assets.