Bloomberg News

Orix May Buy U.S. Asset Manager to Enter Equity Market

October 06, 2011

(Updates with investment adviser comment in sixth paragraph.)

Oct. 6 (Bloomberg) -- Orix Corp., the Japanese financial services provider whose operations include investment banking and insurance, aims to acquire a U.S. asset management company to add equities to its investment-product offerings.

Tokyo-based Orix may buy an investment management firm or take over a team of fund managers and research staff in the U.S. to start investing in stocks, Deputy President Haruyuki Urata said in an interview in Tokyo on Oct. 3. The company has been in talks with “several firms,” he said, declining to name potential targets or say how much Orix would spend.

The financial company aims to boost its asset-management operations in the U.S. and Asia by adding equity-related investment products to its fixed-income portfolio. The firm acquired stakes last year in a U.S. hedge fund manager that invests mainly in debt, and a Vietnamese investment company.

“We want to diversify our products and client network by expanding into equity investments and attracting Asian investors,” said Urata, 56, who is also chief financial officer. “It’s crucial to show our stakeholders that we are always challenging ourselves and eying new things.”

Shares of Orix, which got about 14 percent of its revenue from the Americas last fiscal year, have fallen 26 percent this year, while the benchmark Nikkei 225 Stock Average shed 17 percent. The shares rose 3.3 percent to 5,880 yen today.

Good Timing

“The U.S. market is the most important for the asset management business in terms of size and potential,” said Yoku Ihara, an investment adviser at Retela Crea Securities Co. in Tokyo. “It’s positive to see the firm is aggressively trying an acquisition and it’s good timing because of the yen’s appreciation.”

Overseas investors account for 52 percent of the company’s shareholders. The yen has climbed 12 percent against the dollar in the past six months, the only one of 16 major currencies to advance.

Orix purchased 25 percent of Ho Chi Minh City-based Indochina Capital Corp., which operates real estate funds with $500 million under management, in November. It also acquired in December a majority holding in Harrison, New York-based Mariner Investment Group LLC, which manages about $11.7 billion.

The firm aims to double assets under Mariner Investment within five years to more than $20 billion, Orix USA Corp. President James Thompson said in an interview in October 2010.

Orix, formed in 1964, has about 18,000 employees and 883 subsidiaries and affiliates in more than 25 countries, according to its website. The company posted a 44 percent gain in profit for the three months ended June to 23.7 billion yen ($309 million), driven by investment banking and overseas businesses.

Orix also plans to add new markets for its financing, and will sell 400 million yuan ($63 million) of bonds by March 31 in Hong Kong, while considering raising funds in Australia, Thailand, South Korea, Singapore and Malaysia, said Urata.

Dallas-based Orix USA in 2006 bought Houlihan Lokey Howard & Zukin, a merger and acquisition adviser focused on helping smaller companies restructure.

--Editors: Chitra Somayaji, James Gunsalus

To contact the reporters on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net; Takako Taniguchi in Tokyo at ttaniguchi4@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net


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