Orix Corp., Japan’s most acquisitive financial firm, plans to spend 50 billion yen ($506 million) on takeovers in Southeast Asia and the Middle East in the next 12 months to tap faster-growing economies.
The company is working toward deals in countries including Vietnam, Myanmar and Cambodia, Corporate Executive Vice President Kazuo Kojima said in an interview. The targets include consumer lenders, banks and asset managers, according to Kojima, who oversees investments at the Tokyo-based firm.
Orix is among Japanese companies that are expanding in emerging markets as a shrinking population limits growth potential at home. This year, it announced deals to buy stakes in firms such as Tenger Financial Group, which owns Mongolia’s fourth-biggest bank, and Saudi Arabian insurer Mediterranean & Gulf Insurance & Reinsurance Co., known as MedGulf.
“Our overseas takeovers focus on the financial sector and tend to be strategic investments so that Orix and the companies can work together to expand business,” Kojima, 57, said on July 10. “Asia is growing rapidly. In such a growth phase, companies expect us to help them increase capital. It’s a win-win situation.”
Operations abroad accounted for about 20 percent of Orix’s 1.1 trillion yen in revenue for the year ended March, according to an earnings statement posted on its website. The firm is trying to diversify its business in emerging markets away from leasing, Kojima said.
“We’re interested in companies that do financing for small and medium-sized enterprises or consumer lending,” he said. “We feel an affinity with them because those are business areas that we’re good at.”
The company, which operates in 27 countries and regions outside of Japan, also wants to enter Africa, Kojima said, without elaborating. It currently has no presence there.
Orix has announced 15 acquisitions and joint ventures over the past year, the most of any Japanese enterprise apart from trading companies Mitsui & Co., Mitsubishi Corp. and Itochu Corp., according to data compiled by Bloomberg. Eleven of those deals were investments valued at more than $3.5 billion in companies abroad, the data show.
Its biggest takeover in the past year was a $2.6 billion dollar-purchase of Rabobank Groep’s Robeco Groep NV asset-management unit in the Netherlands.
At home, Orix expects to spend 50 billion yen buying companies in the coming year even as competition with private-equity rivals may intensify amid a recovery in the Japanese economy, said Kojima.
The company has spent about 42 billion yen so far this year on buyouts of domestic companies such as Asahi Fiber Glass Co. For private equity investments, Orix usually seeks an exit after five years, he said.
“Demand is likely to increase as private-equity funds hit by the Lehman shock have been able to raise funds lately and Abenomics may fuel competition,” said Kojima, referring to Prime Minister Shinzo Abe’s growth policy. “We’re looking at information-technology, food and health-care companies worth between 10 billion yen and 50 billion yen.”