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Nomura To Raise $5.6bn In Its Biggest Stock Sale

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Nomura unveiled surprise plans to raise Y511.3 billion (£3.4 billion) in a giant global stock sale aimed at funding its advance into the US and China and bolstering its capital position ahead of a potential tightening of international financial regulations.

The move is expected to force other Japanese banks and brokerages to launch their own capital-raising measures in what one London-based Japanese equities trader predicted could turn into a “top-of-the-market†scramble for cash.

The massive capital-raising scheme, which will cause a 30 per cent dilution of Nomura’s common stock, is the Japanese investment bank’s largest ever and its second such move since buying the Asian and European operations of Lehman Brothers exactly a year ago. One senior fund manager said that Nomura would be obliged to demonstrate quickly that the share dilution was offset by “credible plans to generate big profitsâ€. Part of the new investment cash is likely to help finance on a near doubling of Nomura’s fixed income business in the US.

In March, Nomura raised Y270 billion in its first stock sale since the late 1980s. Under the terms of that deal, the bank was not allowed to undertake a second fund-raising exercise until a period of exactly six months had passed, which it did earlier this week. Analysts interpreted the sudden lunge to the market as an attempt by Nomura to beat its local rivals Daiwa and Tokyo Mitsubishi to investment billions that may quickly dry up as the market is flooded with newly issued paper.

Will other Japanese banks now look for new cash to help expansion? :unsure:

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