Deutsche Bank AG is helping smaller Japanese companies less able to access the bond market raise money using warrants, as it searches for investment banking clients to generate future business.
The German lender was the lead sales arranger in 2013 of warrants, securities that give a holder the right to buy shares of a company at a fixed exercise price, its own data show. The market for contracts sold to investment banks expanded fivefold to ¥107 billion ($1 billion) last year, according to Bank of America Corp. data. This year, Deutsche Bank is trailing Bank of America in the arranging stakes, that data show.
Prime Minister Shinzo Abe's unprecedented fiscal and monetary stimulus triggered a 137 percent surge in the Tokyo Stock Exchange's Mothers market for high-growth stocks last year, making it more attractive for smaller companies to sell the securities, which provide almost no funds for the issuers unless they're exercised. Biotech companies including RaQualia Pharma Inc. and ReproCell Inc. have used the contracts in 2014 as the Mothers index pares losses generated the first four months of the year.