(Yicai) May 10 -- Daiwa Securities China, the China unit of Japan’s Daiwa Securities Group, has risen out of nowhere to place second in the Chinese merger and acquisition services market, thanks to the company’s global network and focus on smaller firms.

Daiwa Securities China, which was set up in 2020 and is the only Japanese-controlled securities company in China with an investment banking license, logged a M&A transaction volume of CNY25.6 billion (USD3.5 billion) in the first three months, according to recent reports. Last year the firm was not even in the top 10.

M&As and restructuring have become an area of focus for brokerages as the initial public offering market shrinks. In the first quarter, mainland-listed companies completed 561 M&As as well as restructuring cases, according to incomplete statistics from Hithink RoyalFlush Information Network’s financial terminal iFinD. The cumulative transaction volume surged 10 percent from a year earlier to top CNY310 billion (USD43 billion).

Daiwa’s impressive performance in the three months ended March 31 is largely due to the Tokyo-based firm’s global network and its focus on the mid-sized M&A market, Geng Xin, chief executive officer of the China subsidiary, in which Daiwa holds a 51 percent share, told Yicai in an exclusive interview.

Cross-border M&A negotiations often face numerous obstacles, such as time differences, language barriers, cultural differences and a lack of understanding of regulatory policies, Geng said. Each of these can slow down or even lead to the breakdown of brokering a deal.

"As a Japanese-controlled securities company, Daiwa China can leverage the company's global network and the expertise of local branches to communicate better with customers at home and abroad," Geng said.

Daiwa China is focusing on M&A and restructuring market opportunities in the three major fields of consumption, medical and health care as well as advanced manufacturing, Geng said. These three fields are also areas where Chinese and Japanese companies are closely connected.

“As a foreign investment bank, we need to proactively consider what China’s capital market needs and strive to become an important player in this market,” Geng said.

“Medium-sized enterprises have weaker global market capabilities than large ones, and we can use our expertise in this regard," he added.

Editors：Tang Shihua, Kim Taylor