Nomura to buy Instinet to gain trading clients

Nomura Holdings Inc., Japan’s largest brokerage, agreed Thursday to buy U.S. electronic brokerage Instinet Inc. from Silver Lake Partners to gain access to more hedge fund clients.

The deal would mean a fast profit for Menlo Park, Calif.-based Silver Lake, a buyout firm that spent $208 million last December for New York-based Instinet. Nomura declined to say what it would pay, but the website Financial News estimated that the price was $1.2 billion, beating out bids by Citigroup Inc. and State Street Corp.

The purchase would give Nomura access to Instinet’s nearly 700 hedge fund clients and to its JapanCrossing system, which electronically matches orders for large blocks of stock.

“They are still in the early stages of the transition in Japan to electronic trading from manual, and this will give Nomura a tremendous head start,” said Instinet Chief Executive Ed Nicoll.

Instinet handled a daily average of 189 million shares traded in the U.S. during the second quarter, more than double the figure a year earlier, as investors such as hedge funds increasingly turned to electronic systems to execute orders for less than the cost of trading on exchanges.