Japan’s first SPC-Law registration, and the move into securitization and asset management (1998)

What it means to stand at the head of an institution

To be ready for the first registration two months after the law took effect, the company must have been working on it before the statute had taken shape. President Minami Keisuke’s judgment that selling any more of its well-performing properties would sap the company’s strength, and planning director Hatanaka Makoto’s view that separating ownership from operation would be the key from here, pointed at the same question. Rather than a choice between holding on and selling off, the company went after a third way — let investors hold the assets and earn from managing them — in the very first year the framework was available.

Acquiring a technique for earning without owning was not, however, the same as letting go of risk. Large developments placed inside special-purpose companies disappeared from the balance sheet, but the unrealised losses stayed with the equity investor, and surfaced all at once as a net loss of $898.7M (¥72bn) in the year ended December 2011. It took more than a decade for the asset-services business to grow into a third pillar, and in that time the same mechanism also carried the largest loss in the company’s history. Standing at the head of an institution means taking on its immaturity first.