ORIX - Company History

Leasing is a business that must hold the asset and lend it out over years, which means it needs two things at once — deep funding and a sales channel to find lessees — and neither side can do it alone. Nichimen, hurrying to become a full-line trading house, wanted a stronger machinery arm and sent Miyauchi Yoshihiko of its overseas division to U.S. Leasing in America to learn the trade. But leasing was an unknown concept in Japan and Nichimen could not fund it by itself. So on 17 April 1964, three trading houses (Nichimen, Nissho, Iwai Sangyo) and five banks (Sanwa, Toyo Trust, Nippon Kangyo, Kobe, Industrial Bank of Japan) put up $277,778 (¥100m) of capital between them and founded Orient Leasing at Koraibashi in Osaka, with U.S. Leasing supplying the know-how. The company was born owing loyalty to no single industry and no single group — the structural fact that shaped everything after.

The first president was Nichimen’s own, held concurrently; the business was actually built by Inui Tsuneo, a career Sanwa banker who came in as full-time vice-president and took the presidency in 1967. Inui deliberately discarded his Sanwa origins and ran an independent line: by the third year every seconded employee had been sent back to the parents and the company operated on its own staff alone, and by 1986 a third of its roughly 1,150 employees were mid-career hires. The selling was improvised — the very first lease, in 1964, was four cash registers for a supermarket in Kanazawa.

Growth was violent. Sales of ¥5 million in the year to September 1964 became ¥9.29 billion by September 1970, and lease contracts written that year reached ¥25.29 billion. Orient Leasing listed in Osaka in April 1970 — over the grumbling of Sanwa and Nichimen executives, who had not started the company for that — reached the first sections of Tokyo and Osaka by 1973, and in 1973 became the first Japanese company to issue an Asian-dollar bond. From the beginning it published accounts under U.S. SEC standards alongside the Japanese ones, because Japanese declining-balance depreciation on leased assets made reported profit meaningless: profit of ¥306 million for the year to September 1970 was ¥717 million on the American basis. Ten straight years of profit growth followed from 1968, and by the year to September 1984 lease contracts passed ¥700 billion — first in the industry.

Leading the industry no longer paid. Regional banks and credit unions had piled into leasing, rate competition had pushed ordinary profit down to about 2% of sales, and by fiscal 1984 finance and housing loans wrote more business than leasing itself, which had fallen below 40% of the total. Miyauchi, president since December 1980, said plainly that a company called “Leasing” was misnamed, and set about becoming a financial services firm with leasing at its core. He expanded by acquisition — a stake in Osaka Ichioka Securities in 1986 to enter broking, Toshiki Interior in 1987, the Hankyu Braves baseball club in 1988 — but under a strict rule of scale: a manager’s first duty, he said, is the safety of the company and growth comes second, so nothing should ever be bet on a single choice. Diversified businesses were life-rafts, not gambles.

In April 1989, on the 25th anniversary, Orient Leasing became ORIX Corporation. The name change was itself the strategy — the announcement, to staff, customers and the market, that the company no longer described itself by one product. What followed used the licence: Japan’s first futures-fund management company in 1990, aircraft leasing out of Ireland in 1991, life insurance the same year, and in April 1998 the purchase of Yamaichi Trust Bank, stranded by the collapse of Yamaichi Securities, which brought a banking licence into the group.

The other half of the decade went badly. What worked in corporate lending did not transfer to consumers: Miyauchi had rejected consumer-finance proposals at least twice before relenting in 1990, and the 18%-a-year ORIX Club lost to Takefuji at 27%. Direct-mail life insurance (1997) and direct deposits (1999) drew attention but almost no earnings — Miyauchi called the consumer businesses of those years konnyaku, or barium: not poison, but no nutrition either. Online broking was reactive too, ORIX Securities cutting commissions a week after DLJ direct forced the issue in July 1999. What did land was governance: the NYSE listing of September 1998, the first by a Japanese financial services company, taken deliberately as external discipline, followed by an executive-officer system in 1998 and outside directors with nominating and compensation committees in 1999. By March 1999 profit had risen four consecutive years, ROE was about 8%, and foreign ownership at 34% was the highest in Japanese finance.

In April 2000 Fujiki Yasuhiko became president and Group COO while Miyauchi took the chairmanship and the role of Group CEO. Fujiki’s explanation was structural: a financial services business this wide, with overseas operations attached, could no longer be held in one head, so responsibility was split across several — collective leadership. Two years later the growth itself was challenged from outside. In June 2002 a Deutsche Securities analyst published a 45-page report attacking ORIX’s profit formation and disclosure, arguing that Japanese-standard profit had overtaken SEC-standard profit in the year to March 2002 only because finance leasing and insurance had stopped growing. ORIX rebutted it in writing, then put its normally invisible management in front of some 270 investors and analysts on 15 July; Deutsche cut its target price but raised its investment rating the next day, on the quality of the disclosure.

Then came the two acquisitions that made ORIX a public argument. In June 2004 it agreed to merge the loss-making Osaka Kintetsu Buffaloes into its own Blue Wave, triggering the first players’ strike in Japanese baseball history and a fight over new entrants. Miyauchi, as owner, argued that the ¥15–16 billion of annual losses across the professional game could no longer be justified as advertising expense and that the sport had to stand as a business; the settlement produced a new Rakuten club in Sendai, kept twelve teams and two leagues, and pushed the Pacific League into cooperative reform. In 2005 ORIX took ¥23 billion of new shares in the condominium developer Daikyo, then under the state turnaround agency, for about 44% of the votes — described at the time as a pure investment to be exited within five years, with no intention of combining.

Underneath, the balance sheet had drifted into property. Total assets grew from ¥7.2 trillion in March 2006 to ¥8.9 trillion in March 2008 on lending to emerging real-estate developers, non-recourse loans to property SPCs, and ORIX’s own condominium development. The financial crisis hit exactly there. On 9 February 2009 ORIX cut its forecast for the year to March 2009 from ¥105 billion to ¥15 billion; the outcome was ¥21.9 billion, down about 87%. Against ¥3.5 trillion of property-related assets and ¥5.5 trillion of debt at the end of 2008 the shares briefly fell below ¥2,000. The company abandoned ¥300 billion of planned new property investment, set out to shrink to about ¥7.8 trillion of assets, rescued Daikyo a second time with ¥10 billion of preferred shares, and in July 2009 sold 51% of ORIX Credit to Sumitomo Mitsui Banking Corporation. The six-year support of the Murakami Fund, unwound in May 2006 after Murakami Yoshiaki’s arrest, had already cost it a season of reputational fire.

ORIX kept buying financial businesses through the recovery — RED Capital Group in 2010, Mariner Investment Group the same year — and in February 2013 agreed to pay about €1.935 billion, or $2.6B (¥251bn), for roughly 90% of the Dutch asset manager Robeco, whose assets under management exceeded ¥23 trillion. Miyauchi observed that in a healthy world economy the price would have been unavailable. Hartford Life Insurance followed in 2014 and the accounting-software firm Yayoi in December of the same year; Robeco was taken to 100% in 2016 and is now ORIX Corporation Europe.

The deeper change was in how ORIX earned. Inoue Makoto, president from 2011, put it arithmetically: a 1% spread between funding and lending costs disappears if 1% of the book goes bad, and the spread was down to 0.5%. Lehman had shown what excessive leverage and property concentration did, so the company stopped manufacturing profit out of borrowing and moved to equity-style investment with its own money — leverage fell from four times at the crisis to 1.6 times. From 2012 it took stakes in seventeen companies, mostly succession and carve-out deals, from liquor distribution to veterinary medicine; unlike a private-equity fund borrowing heavily against a fixed clock, ORIX argued, its own cash let it set its own exit date and left the acquired company free of its strategy. In December 2015 it formed Kansai Airports with VINCI Airports to run Kansai International and Osaka International, and it went on into inns and hotels. By the year to March 2017 revenues were ¥2.68 trillion and net profit ¥273.2 billion, a third consecutive record, with leasing down to about 20% of profit and return on assets at roughly 2.5% against about 1% at other big lessors.

What was acquired was also sold. Houlihan Lokey went in 2019, Mariner in 2020, Yayoi in 2022, and 66% of ORIX Credit to NTT Docomo in 2024, while Elawan Energy in Spain was bought in 2021 and taken to 100% in 2023; Daikyo, the “pure investment” of 2005, was taken private by tender offer in December 2018 for about ¥77 billion and delisted. By March 2025 revenues were ¥2.87 trillion, net profit ¥351.6 billion, total assets ¥16.9 trillion, and the group ran 1,163 consolidated subsidiaries across ten segments — roughly triple the revenue and double the headcount of 2011. But assets had grown faster than earnings: ROE fell from above 12% in March 2018 to 8.8%. In January 2025 Inoue handed the presidency to Takahashi Hidetake and moved to chairman and Group CEO, and said the target was to become Blackstone — selling the low-return businesses, buying the high-return ones, and turning the balance sheet rather than holding it.