CFO & CSO Message
Toward a Hybrid Business Model
that Achieves Both Balance Sheet and AUM Growth
Masataka Yamada
Member of the Board of Directors
Senior Managing Executive Officer
Chief Financial Officer and Chief Strategy Officer
Responsible for Corporate Strategy and Management Unit
Toward a Hybrid Business Model that Achieves Both Balance Sheet and AUM Growth
To achieve ¥1 trillion in net income and 15% ROE, while simultaneously maintaining an A‑level credit rating, ORIX cannot rely solely on balance sheet expansion to drive growth. Integrating our growth and financial strategies while balancing capital efficiency with continued growth will be essential going forward. For this reason, we are shifting toward a hybrid asset‑management business model — one that not only generates investment income from proprietary investments but also expands fee income by leveraging third‑party capital.
At ORIX, we have a long history of growth through identifying investment opportunities, taking on risk, and enhancing enterprise value. While continuing to leverage these strengths, we aim to evolve toward a more capital‑efficient earnings structure and achieve sustainable growth.
Our Strengths: Creating Investment Opportunities and Enhancing Asset Value
As we advance our asset‑management business model, our greatest strengths lie in our ability to originate investment opportunities through our own efforts and enhance their value. In the asset‑management business, the key is whether we can consistently provide investors with attractive assets. We operate a wide range of businesses including real estate, renewable energy, transportation assets, infrastructure, private equity, and private credit. Through this business foundation, ORIX can independently source and structure alternative asset products to offer to investors, a capability that makes us a truly unique player in the Japanese market.
Another defining characteristic is our ability to utilize our own balance sheet. We can originate and enhance the value of assets through our own efforts, and subsequently bring in third‑party capital. Our ability to run this cycle internally is a significant competitive strength of our asset‑management business.
We are not merely a financial player. I see ORIX as an asset operator with a financial mindset. In real estate, we engage in development and operations; in renewable energy, we run power‑generation businesses; in aircraft, we manage and lease assets — all while being deeply involved in business operations to enhance value. Our ability to take a hands‑on approach and increase a business’s enterprise value even after investing is a key differentiator from typical asset managers.
Our Track Record in Japan and Overseas Provides a Foundation for Asset Management Growth
The asset‑management business model we aim to build is not something we are creating from scratch. We already have a strong foundation of achievements both in Japan and overseas.
In the real estate business, for example, we launched the domestic real estate fund ORIVA Ⅰ in the fiscal year ending March 2025. Although we initially envisioned a scale of ¥100 billion, strong investor demand led the fund to grow to ¥120 billion.
I believe this reflects investor recognition of the real estate investment and operations expertise and track record we have cultivated over many years.
In private equity, we established a USD 2.5 billion private equity investment platform in Japan together with the Qatar Investment Authority (QIA). This is our first PE fund dedicated to the Japanese market, operated with 60% capital from ORIX and 40% from QIA. It expands opportunities to invest in large‑scale domestic M&A deals and serves as one example of our asset‑management model leveraging third‑party capital in practice.
Overseas, we have advanced the shift from proprietary investments to a model that utilizes third‑party capital, centered on NXT*1 Capital in the United States. NXT Capital has expanded its AUM while building a strong track record, evolving into a business model supported by a diverse investor base.
- NXT Capital Group, LLC
Today, our total private asset AUM stands at approximately ¥7 trillion.
Meanwhile, total assets are around ¥18 trillion, resulting in an AUM‑to‑total‑assets ratio of 0.4x — a level that remains low compared with major global alternative asset‑management firms A, B, and C.
I see significant upside potential in this situation. Essentially, ORIX still has substantial room to grow AUM.
The measures required to fully develop this business model are clear. First, ORIX will need to achieve a company‑wide shift in mindset regarding the use of the balance sheet. We must approach our businesses based upon the assumption of utilizing investor capital, structuring deals and developing assets while strategically deploying our balance sheet. We must also further strengthen our ability to source and structure assets based on investor needs. The risk‑return characteristics investors seek do not necessarily match the assets we currently hold. Understanding investor priorities more deeply and creating asset classes and investment opportunities that align with them will be essential.
Furthermore, to enhance our global distribution capabilities and investor base, we will continue upgrading our operating platform — including CRM functions, reporting systems, and middle‑ and back‑office capabilities — building on the foundation we have developed to date.
Our Challenge Towards March 2035: Achieving 15% ROE and ¥1 Trillion in Net Income
I believe Japan’s private‑asset market holds significant potential. As asset diversification accelerates globally, overseas infrastructure funds, sovereign wealth funds, and pension funds — along with Japanese life insurers — are increasingly allocating capital to private assets. Compared with overseas markets, Japan is still in a developing stage, but precisely for that reason, it offers substantial room for growth.
Moreover, there are very few players capable of consistently creating attractive assets that meet investor needs, enhancing their value, and offering them as investment opportunities — as ORIX does. We create investment opportunities, increase their value through business operations, and subsequently bring in third‑party capital. Our ability to execute this entire cycle is a major competitive advantage.
We continuously create high‑quality assets that earn investor recognition, attract investor capital through value enhancement, and reinvest that capital into new opportunities. By expanding this virtuous cycle, we will further evolve our hybrid business model — one that grows both the balance sheet and AUM.
I believe this hybrid asset‑management business model will become a critical foundation supporting our next stage of growth. And toward our long‑term goals — achieving 15% ROE, ¥1 trillion in net income, and maintaining an A‑level credit rating — we will continue taking on challenges that lead to sustainable growth in corporate value.