• Bloomberg


Orix Corp. is in talks to spend about $400 million to buy a stake in a Dubai-based life insurer from a European bank, according to President Makoto Inoue.

The finance and leasing company may acquire as much as 49 percent of an insurance holding company in the Persian Gulf state, Inoue said Monday. The Tokyo-based firm is now conducting due diligence to decide transaction terms, he said without naming the target or the seller.

“The Middle East is interesting,” Inoue, 59, said. “There are many joint ventures with European financial firms there, and we see opportunities as banks are now struggling with their businesses and want to sell noncore operations.”

Orix is also considering investing in aircraft leasing, asset managers and other insurers in Middle Eastern countries as European firms sell assets to rebuild capital and retrench in their home markets, he said. 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 the Tohoku earthquake in 2011.

Inoue, also the company’s chief operating officer, said the firm is targeting ¥300 billion in private-equity investments or acquisitions worldwide in the next three years. Orix has made more than 50 merger and acquisition transactions globally over the past five years, according to Bloomberg data.

“We view these investments in order to capture growth in the overseas markets positively,” Jefferies Group Inc. analysts led by Tokyo-based Mac Salman wrote in a report Friday, maintaining their buy rating on the stock. “Historically their investment has generally been done in a disciplined manner.”

To support global expansion, Orix aims to hire 50 local managers in 10 countries, including South Korea, Vietnam, India, Singapore, Thailand, Turkey and Ireland, Inoue said. The company needs to add local people “urgently,” he said.

Total life insurance premiums in the six-nation Gulf Cooperation Council, which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, was $1.8 billion in 2010, a 12 percent increase from a year earlier, according to a report by Alpen Capital. That compares to global life insurance premiums of $2.5 trillion in the same period.

Economic growth in Dubai, one of seven sheikhdoms in the United Arab Emirates, will quicken to as much as 5 percent this year, according to government forecasts. Orix already has leasing operations in Oman, Egypt, Saudi Arabia and the U.A.E.

Inoue also said Orix plans to spend $1 billion to acquire aircraft in the U.S. and other countries over the next three years.

Orix Aviation joins Sumitomo Mitsui Financial Group Inc. in expanding its leasing fleet to tap rising demand from airline customers seeking to avoid the costs of aircraft ownership amid a global economic slowdown. The Dublin-based unit plans to boost aircraft under lease and management, and its customer base, by about 50 percent, David Power, who heads the business, said last month.

It plans to increase its fleet size to as many as 250 planes over five years and to widen its customer base to 100 airlines in three years, from 65, Power said. The company owns and manages 130 planes.

Solar investment

Finance and leasing giant Orix Corp. plans to spend ¥54 billion ($680 million) on solar projects worth 200 megawatts in the next three years.

Orix will invest ¥30 billion to build solar power stations with a total capacity of 100 megawatts, Tamaki Shibata, a spokeswoman for the Tokyo-based company, said Friday. A further ¥24 billion will be spent to lease rooftop space from factories and warehouses for the installation of panels to produce 100 megawatts of capacity, she said.

The plans come after Japan introduced an incentive program for clean energy, including solar and wind, in July. The feed-in tariffs require utilities to pay above-market rates to producers of clean energy with the added costs passed onto consumers as surcharges.

Shibata confirmed a report Friday in the Tokyo Shimbun that said the company may increase the investment to a total of ¥100 billion to build as much as 400 megawatts of capacity.

“We will closely monitor panel and land prices,” she said.

The government set the feed-in tariff for solar at ¥42 per kwh for 20 years, about triple the ¥14.59 per kwh industrial users paid for electricity in the 12 months that ended in March.

Orix is developing a 2-megawatt solar plant in Kagawa Prefecture scheduled to begin operating as early as January, according to the spokeswoman.

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