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Orix might issue new shares to fund M&As: CEO

Bloomberg

Orix Corp. said selling new shares to fund additional acquisitions is an option, after the financial services provider announced its largest-ever takeover last month.

Orix, which agreed to buy Rabobank Groep’s Robeco Groep NV asset-management unit in the Netherlands for €1.94 billion ($2.5 billion), will continue targeting overseas acquisitions, Chief Executive Officer Yoshihiko Miyauchi said.

“Our stomach isn’t full even after the Robeco deal,” Miyauchi, 77, said on March 11, adding that Orix still has as much as ¥200 billion ($2.1 billion) available to spend. “If we find something really good that costs more, then a capital increase would be possible.”

Orix is expanding abroad as deflation and population decline limit domestic demand for its services, which range from insurance to aircraft leasing. The Robeco purchase, Japan’s biggest overseas takeover this year, widens Orix’s global asset management operations, adding to stake purchases in Vietnam’s Indochina Capital Corp. and New York-based hedge fund Mariner Investment Group LLC in 2010.

Orix last issued stock in 2009, raising ¥83.4 billion for debt repayment and investment, it said.

Overseas operations accounted for 19 percent of the Tokyo-based company’s ¥783 billion in revenue for the nine months that ended Dec. 31, according to an earnings statement posted on its website, little changed from a year earlier. Orix has operations in 27 countries and regions outside of Japan.

Miyauchi in September opened Orix Brazil Investments & Holdings Ltd. in Sao Paulo to search for acquisition targets in South America. The unit may spend as much as ¥50 billion on majority stakes in local investment banks and asset managers, Takaaki Nitanai, a company spokesman, said Sept. 7.

“We’re very interested in South America,” said Miyauchi. “It’s one of the regions where we are still missing on the world map.”

Orix in the past year has announced 13 acquisitions worldwide valued at about $3.4 billion, according to data compiled by Bloomberg, up from $450 million a year earlier.

Most recently, Orix agreed to buy a 96 percent stake in Asahi Fiber Glass Co. last week as a private-equity investment, a business Miyauchi expects will be a focus for acquisition funding.

“I can appropriate a sizable amount of funds, about ¥100 billion, for private-equity investments,” he said. “Those deals have more than a 50 percent success rate. Food and fashion businesses have been our favorites.”