Orix, with a diverse portfolio of businesses, including a bank, an insurer and a professional baseball team, made a big bet on asset management in 2013, when it bought investment manager Robeco from Dutch cooperative lender Rabobank for about 1.9 billion euros. It is now seeking to scale up.
"Robeco alone is small. We expect a shakeout in the industry and we need to have scale," Orix CEO Makoto Inoue said in an interview. "We have to build the business through mergers and acquisitions."
Robeco had 246 billion euros ($261 billion) in assets under management as of December. Inoue said he wants to double that, but did not give a time frame.
Acquisitive Orix's growth push comes even though, according to Inoue, investors are clamouring for shareholder returns to be boosted through means such as stock buybacks.
The focus was on targets overseas, as the company missed chances to bulk up at home, he said.
"Until around two years ago, there were sales (of asset management businesses) as non-core assets in Japan. But since GPIF, asset management has become everyone's core business," the CEO said.
Inoue was referring to Japan's giant public pension fund and its strategic shift targeting a bigger allocation to riskier assets, which is being viewed as a potential business opportunity for the industry to attract pension money.
Orix is also eyeing the emerging middle class in Asian countries such as Indonesia, Philippines and Malaysia as future clients and is studying plans to set up an asset management company from scratch in Southeast Asia, he said.
Begun in 1964 as a leasing company, Orix has grown to become a financial conglomerate with 11 trillion yen ($92 billion) in assets.
Inoue, 62, who became CEO last year, said he faces growing calls by some investors for higher shareholder returns lately, but he does not subscribe to a view that companies should be measured against a uniform set of figures for shareholder returns.
"We are still in the stage where we can invest in new businesses and enhance profitability. When it runs its course, we will spend money on share buyback and other things, but we are not there yet," he said.
"Most of our 2 trillion yen equity capital is already tied up with businesses, we are not hoarding up free capital."
source: www.abs-cbnnews.com
