Tokyo Century - Company History

Leasing needs two capabilities that rarely sit in one house: the ability to source the equipment, and the ability to judge whether the borrower will pay. A trading company has the goods and the sales channels; a bank has the credit judgement and the funding. In July 1969, with capital spending surging through Japan’s high-growth years, Itochu, Dai-Ichi Bank, Nippon Life and Asahi Mutual Life put up $1.4M (¥500m) between them and incorporated Century Leasing System in Tokyo, expressly to wire the two halves together inside a single company and write business no single parent could write alone. The industry was still forming — Orient Leasing, today’s Orix, dated only from 1963 — and the founding prospectus spoke of contributing to the rationalisation and modernisation of industry. The design also fixed something more lasting: a company whose management framework was agreed jointly by a trading house, a bank and two insurers.

Through the 1980s the model worked as intended, growing lease receivables on Itochu’s equipment flow and Dai-Ichi Kangyo Bank’s credit lines. In April 1985 the auto-leasing arm was hived off into Century Auto Lease, again with partners; twenty years later, in October 2005, it merged as an equal with NTT Auto Leasing to become Nippon Car Solutions — a company the group now owned half of rather than all of, with roughly 150,000 vehicles instead of a fleet it could never have reached alone. The tie to NTT began there, and would take fifteen more years to reach its conclusion.

In September 2003 the company listed on the second section of the Tokyo Stock Exchange, moving up to the first section a year later. For thirty-four years its credit had been made of its shareholders’ names — it could run ¥800bn of assets on ¥18.6bn of equity because lenders looked past it to the four; what listing bought was not only the ¥7.52bn raised but a price and a rating of its own, marked daily. Yet the industry was consolidating around the megabanks: Sumitomo Mitsui Finance and Leasing was formed in 2007, Mitsubishi UFJ Lease merged with Diamond Lease the same year, and only the Mizuho camp still kept two separate firms — the old Bank of Tokyo’s Tokyo Leasing and the old Dai-Ichi Kangyo’s Century Leasing System. Growing alone was running out of road.

The basic agreement to merge with Tokyo Leasing was announced on 29 September 2008 — a fortnight after Lehman Brothers failed. What the two sides settled was deliberately narrow: that they would combine, which entity would survive, and what the company would be called. The share exchange ratio was left open, and with the stock trading down to ¥480 that October, fixing it first would almost certainly have wrecked the talks. The merger took effect in April 2009 as Tokyo Century Leasing. The surviving entity held only 49.0% of the votes and took in ¥1,158bn of assets against its own ¥845.9bn; the presidency went to Tokyo Leasing’s Asada Shunichi, the chairmanship to Century’s own president.

Asada made systems the test of whether the merger was real, calling IT a lifeline of management on a par with finance and running the integration himself; the two core systems were folded into one by March 2011, two and a half years after the announcement and the fastest such integration in the industry. The financials followed: recurring profit rose from ¥33.4bn in FY2009 to ¥46.2bn in FY2011 and ¥55.1bn in FY2013, on consolidated assets of ¥2,260bn that put the group around fourth in the industry. New ground came quickly too — a controlling stake in IHI Finance Support in 2010, a subsidiary in Indonesia in 2011, and in September 2012 a solar joint venture with Kyocera, set up weeks after Japan’s feed-in tariff began and the first of what would later be disclosed as the environmental infrastructure business.

Then came the two acquisitions that changed what the company was. It bought 35% of the American IT-equipment lessor CSI Leasing in 2015 and the rest in 2016; in December 2017 it paid about $445.8M (¥50bn) for 20% of Aviation Capital Group, a large US aircraft lessor — a field where individual assets run from tens of millions to $100m apiece and where few Japanese bank- or trading-house-affiliated lessors had ventured. In October 2016 it dropped “Leasing” from its name to become Tokyo Century, and from April 2018 it reported in four fields — domestic leasing, domestic auto, specialty and international. The new disclosure made the transformation legible: in FY2018 specialty, led by aircraft, earned ¥38.9bn, more than domestic leasing’s ¥27.7bn and the largest segment profit in the group.

On 6 December 2019 Tokyo Century bought the remaining 24.5% of Aviation Capital Group for about $2.9B (¥321bn) ($2.983bn), taking full ownership of a lessor with 316 aircraft owned or managed. Consolidated assets jumped from ¥4,086.5bn to ¥5,608.6bn in a single year — ¥1,522.1bn, a 37% rise and the largest in the company’s history — with interest-bearing debt up ¥488.7bn. A cross-border acquisition of that size was without precedent in Japanese leasing, and it made the group the domestic front-runner in aircraft finance.

The price was balance-sheet thinness: the equity ratio slipped from 10.5% to 9.9%. Two months later, in February 2020, the company announced a capital and business alliance with NTT and raised about $878.4M (¥94bn) in a third-party allotment — NTT taking roughly $655.6M (¥70bn) for about 10% and third place on the register, with the balance to Itochu, its largest holder. NTT·TC Lease followed in July 2020 as a 50/50 venture. The auto-leasing arm spun out in 1985 had, by way of a merger of equals, walked its partner all the way onto the parent’s own shareholder list.

The timing could hardly have been worse. Covid-19 hit both new pillars at once: airlines demanded rent relief and aircraft became hard to repossess, while rental-car bookings at Nippon Rent-A-Car fell to about half of the prior year — worse, Nogami Makoto, who had become president that April, told the FY2019 briefing, than anything he had seen, including the 2011 earthquake. Then Russia’s invasion of Ukraine in February 2022 stranded eight ACG aircraft on lease to Russian carriers, with a book value near $380m: about ¥46bn of impairment in FY2021 and ¥75.9bn of extraordinary losses in FY2022 as the whole Russian exposure was written down. Net profit fell about 91% to ¥4.8bn, the lowest since the renaming. That the group stayed in the black at all was the four-field structure working — domestic leasing at ¥22.9bn and auto at ¥12.1bn covering specialty’s ¥19.1bn loss — and it was in that year that environmental infrastructure was split out as a fifth reporting field.

With the extraordinary losses behind it and restructuring taking hold, the recovery was abrupt: net profit went from ¥4.8bn in FY2022 to ¥72.1bn in FY2023 and a record ¥85.2bn in FY2024, with recurring profit rising to ¥117.3bn and then ¥132.2bn. The engine was the normalisation of ACG’s aircraft business — lease income and gains on aircraft sales recovering together — while the international field led by CSI Leasing kept growing at double digits, so that two American subsidiaries now anchored the group’s earnings.

In May 2023 president Baba Koichi set out a five-year plan to fiscal 2027 under the banner of TC Transformation: four workstreams in portfolio, people, digital and green, targeting ¥100bn of net profit and an ROE above 9%. Stretching the plan from the customary three years to five was itself a judgement — long enough to bridge the recovery curve in aircraft and the completion of property redevelopment projects around 2028. In April 2025 Baba was succeeded by Fujiwara Koji, until recently president of Mizuho Bank, as the eleventh president: a fourth consecutive chief executive from the Mizuho side, and a reminder that a company assembled in 1969 out of four shareholders’ agreement is still, fifty-six years on, shaped by who sits on its register.