Orix, Japan's biggest leasing company, announced Sunday night a merger with Houlihan Lokey Howard & Zukin, the US investment banking and restructuring firm, that would create an international group with combined assets of $2.5bn.

Under the plan, Orix will merge its US corporate lending operations with Houlihan, which will continue to operate under that name. The new group would have more than 800 employees in 10 countries to provide clients with advice on mergers and acquisitions and restructuring.

The deal would give Houlihan, which has advised on some of the biggest US bankruptcies in recent years, including Enron and WorldCom, access to Orix's balance sheet. Based in Tokyo, Orix has a market capitalisation of about $15bn and has been among the top providers of lease financing in Japan since it was founded in the 1960s.

Orix went through a period of international expansion in the 1970s but has been looking to add to its overseas presence. A large number of bankruptcies during the post-bubble equity bear market and the return of M&A have helped firms such as Houlihan produce strong revenues. The group was expecting to generate revenues of about $315m this year.

Lazard, the investment bank whose mix of businesses includes M&A and restructuring, listed successfully on the New York Stock Exchange this year. Greenhill, its smaller peer, did the same last year, while Thomas Weisel Partners, the investment bank focused on growth companies, filed recently for an initial public offering.

Under the terms of the deal, Orix and Houlihan would establish a new holding company to be 30 per cent owned by Houlihan and 70 per cent owned by Orix USA, a corporate lending unit.

Although much smaller in scale, the deal would mirror a similar arrangement between Goldman Sachs, the US investment bank, and Japan's Sumitomo Mitsui Financial Group.

The new group would aim to dominate midmarket deals in Europe, the US and Asia. Houlihan is already a common participant in midsized transactions.

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