Orix Targets Investment Banking Assets With New Brazil Unit

Orix Corp., the Japanese financing company targeting about $4 billion in private-equity investments by 2015, opened a Brazil unit this month to seek acquisitions in South America.

Orix Brazil Investments & Holdings Ltd., based in Sao Paulo, may spend as much as 50 billion yen ($634 million) taking majority stakes in local investment banks and asset managers, said Takaaki Nitanai, a Tokyo-based company spokesman. The unit will be managed by Orix USA Corp.

The three-person operation marks Orix’s re-entry into Brazil since exiting a leasing venture with Banco Bradesco SA 12 years ago and follows Mizuho Financial Group Inc.’s agreement to buy Dusseldorf, Germany-based WestLB’s Brazilian unit in June. Tokyo-based Orix is seeking assets being sold by European financial firms as they streamline overseas operations to weather the continent’s debt crisis, Nitanai said.

Shares of Orix rose 1.8 percent to 7,380 yen at 12:54 p.m. in Tokyo and have jumped 16 percent this year. The Nikkei 225 Stock Average has risen 4.7 percent in 2012.

Orix, whose operations include insurance, aircraft and auto leasing, and the Buffaloes baseball team, has been examining a return to the South American market and is focusing acquisitions on fee businesses, according to its annual report for the year ended March 2011.

Deals Drop

Brazilian mergers and acquisitions announced this year total about $46 billion, according to data compiled by Bloomberg. Takeovers in the country totaled $120 billion last year, a 27 percent decrease from 2010. The country’s equity and equity-linked offerings total $5.2 billion this year and ended 2011 with a tally of $12.1 billion, the data show.

Orix has made more than 50 merger and acquisition deals globally over the past five years, according to data compiled by Bloomberg. It earned 23 percent of its revenue from overseas operations in the year ended March.

President Makoto Inoue said in an interview last month that his company is in talks to spend about $400 million to buy a stake in a Dubai-based life insurer from a European bank. He also said Orix may invest in aircraft leasing, asset managers and other insurers in the Middle East as European firms sell assets to rebuild capital and retrench to their home markets.

The company plans to sell about $3 billion in bonds this year to accelerate an overseas expansion plan hampered by Europe’s debt crisis and Japan’s record earthquake in 2011.

Mizuho and bigger Japanese rivals Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. are also looking to gain market share abroad from European competitors. The country’s lenders are looking to higher-yielding markets to make up for declining profitability on domestic loans.

WestLB, now known as Portigon AG, agreed in June to sell its Brazil unit to Mizuho, without disclosing terms of the transaction. The acquisition gives the Tokyo-based lender access to growing demand for infrastructure-related financing in Brazil.

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