COO Message

My varied roles broadened my horizons

I am Hidetake Takahashi, who assumed the position of Representative Executive President and Chief Operating Officer in January of this year. Since joining the company in 1993, I began my career in corporate sales in both regional and the Tokyo metropolitan areas, then worked in investment banking, which included real estate investment and finance and private equity investment. I subsequently gained experience in management and business restructuring while on assignment at DAIKYO INCORPORATED, now a wholly-owned subsidiary. From 2020 to the end of 2024, I was primarily responsible for the development, investment, and operation of renewable energy businesses within the Environment and Energy Segment, including a two-year assignment in the UK. I joined the management of ORIX as an Executive Officer in January 2020 and as a member of the Board of Directors in June 2024. I am pleased to once again introduce myself as COO.
When I joined the company in 1993, the bubble economy that had previously been hailed as "Japan as No. 1" had just collapsed, and the following decade saw a series of financial institution failures, mergers, and reorganizations, leading to a prolonged economic downturn in Japan. Meanwhile, for ORIX, this was a period of diversification, following the “adjacent business, then the business adjacent to that” model. We expanded from our roots in finance as a lessor to finance, business and investment by entering into banking, life insurance, real estate, and business restructuring investments, as well as enhancing our investment banking operations. As a young employee, I spent a fulfilling period working in sales and new business development. The years following 2008 were marked by the global financial crisis, which posed significant challenges for ORIX in terms of capital raising. We overcame the crisis by mobilizing all available resources, including asset sales, debt reduction, and capital strategies. For me, this was a period of transition during which I deeply felt the weight of responsibility towards society and the economy as I experienced the shift from growth to rapid financial and operational contraction. From 2011 to 2014, I was responsible for the emerging field of environmental services and energy on a global scale, where I focused on business growth.

Transforming our business model to achieve our long-term vision

Based on these experiences, since assuming the position of a member of the Board of Directors, I have worked with other members of management to formulate a medium-term business plan starting from the fiscal year ending March 2026. Our Group has grown over the past 60 years, experiencing both good times and bad, but we believe that we are now at a major turning point. In particular, we recognized that simply expanding our business scale while continuing to increase total assets of approximately 17 trillion yen and interest-bearing debt of approximately 6 trillion yen is not a sustainable path forward. Instead, we felt it necessary to shift our focus toward enhancing the profitability of the approximately 4 trillion yen in shareholders' equity we have accumulated. While ORIX has abundant business and investment opportunities, with a pipeline of approximately 2 trillion yen at any given time, we have come to recognize that our ROE is stagnating and that efforts are needed to maintain our international credit ratings.
Under this recognition, the three-year plan through March 2028 was formulated with "ROE of 11% or higher" and "maintenance of an A-rated credit rating" as key performance indicators. The ROE target signifies a shift toward achieving sustainable performance rather than short-term gains. Specifically, we will focus on portfolio management that grows businesses and assets with high profitability and accelerates the capital recycling of those with low profitability, while maintaining credit ratings and implementing flexible shareholder return measures to quickly optimize capital levels. To achieve this, we must further accelerate the speed of management decision-making.
The medium-term business plan for the next three years has been formulated based on discussions by the Board of Directors and is positioned as a milestone for realizing the long-term vision of ORIX Group. My responsibility is to ensure that ORIX Group continues to enhance its corporate value in a sustainable manner. As a long-term vision to achieve this, we have set forth the goal of "creating business value and solving customer issues to have an impact on society." Additionally, we announced at the May earnings announcement and the June shareholders' meeting financial targets of a 15% ROE and net income of 1 trillion yen by the fiscal year ending March 2035. While these targets are challenging given the performance for the fiscal year ended March 2025 (ROE of 8.8% and net income of 351.6 billion yen), we have established the "ORIX Group Growth Strategy 2035" to enable us to achieve them.

A Group strategy to continue creating value for society

This growth strategy does not limit the scope of ORIX Group's business areas or business models. Instead, it clarifies our commitment to providing solutions to customers and society in line with the "ORIX Group Purpose & Culture" established in 2023 by leveraging our two core business models across the three strategic investment areas of "PATHWAYS," "GROWTH," and "IMPACT".

“PATHWAYS”
The focus of this area will be future-oriented, emerging growth industries. This includes investments in companies and technologies that contribute to the construction of infrastructure to address the accelerating transition to an information society, as well as AI infrastructure businesses that leverage new technologies to create innovative businesses, DX/BPaaS^*, and new mobility services.
* BPaaS: A cloud service that outsources specific business processes to external companies with the aim of improving efficiency, reducing costs, and addressing labor shortages.

“GROWTH”
Amid global population growth and increasing financial assets, we aim to secure new strategic investment areas. Specific examples include alternative investments, hospitality and entertainment, investment and finance in the Asia-Pacific region, and wealth management businesses.

“IMPACT”
To contribute to the realization of a decarbonized society and a circular economy, we are focusing on fields such as renewable energy, new energy, environmentally friendly businesses, and recycling/waste management. By leveraging " innovative thinking" and "diverse expertise," we aim to create a sustainable growth cycle.

An example of how we would implement the above would be that ORIX is considering entering into the data center business under PATHWAYS. This is an area where we can leverage the knowledge and experience we have cultivated in our real estate, environment and energy, and ICT equipment rental businesses. We plan to enter new businesses such as this one after another. We will not be afraid of failure and will challenge ourselves to grow the business to a scale where it can become an independent segment in the future.

Evolving our two core business models

The growth of these three strategic investment areas is dependent on the utilization of the two business models that form the foundation of ORIX's competitive strength. The first is the "Alternative Investment & Operations".

This model involves fund-raising from third-party capital to fund assets that ORIX has invested in and managed, while continuing to manage and operate those assets to generate both asset value growth and fee income. A significant portion of ORIX's operating assets consists of financial and physical assets such as leases, rentals, corporate loans, private equity, real estate, aircraft, ships, and renewable energy, which are classified as alternative assets. The expertise ORIX has cultivated in "finance" and "tangible assets" since its inception in the leasing business has now taken root as a value-enhancement model, establishing a cycle that includes deal origination, decision-making on whether to invest/lend, value enhancement, monitoring, and decision-making on exit/continued ownership. Going forward, we aim to leverage third-party funds to expand fee income and build sustainable earnings. We are committed to expanding and strengthening our asset management business across all segments.

The second business model is the "Business Solutions".

This model creates added value by addressing customer challenges and providing solutions that leverage resources both within and outside ORIX Group including people, information, and technology. Since its founding, ORIX has diversified its businesses by responding to customer needs, expanding to the "adjacent business, then the business adjacent to that." It could also be said that the company has acquired new expertise and opened up new markets in order to meet client needs. In addition to the "centrifugal force" of expansion we have pursued to date, we will further strengthen the "centripetal force" of collaboration and synergies across segments and regions to create new business opportunities to enhance the value we provide to our clients as a larger Group.

Strengthening our management foundation through three key initiatives

While implementing these business models, we will also pursue three initiatives to strengthen our management foundation.

First, "Portfolio Optimization" involves rebuilding our portfolio to achieve optimal capital allocation by quantifying and visualizing growth potential, capital efficiency, and credit rating impact for each business, asset, and investment project in order to improve our ROE.
Second, "Enhanced Risk Management" involves further developing risk management. Thus far, under the CEO’s leadership, we have established a database that enables all executives to access ERM^* information in real time through a dashboard. Going forward, we will continue to enhance systematic risk management, leveraging quantified data to make swift and accurate decisions while eliminating dependence on any particular individuals.
* ERM: Enterprise Risk Management (ERM) is an abbreviation for a methodology that comprehensively and strategically manages risks across the entire organization.
Third, placing emphasis on "Creation of New Businesses" is essential for surviving in a competitive environment and is also central to ORIX's history. We will continue to focus on creating new businesses to achieve sustainable growth and our goal of 1 trillion yen in net income. To take on more creative opportunities in the future, we will expand our asset management business in line with the aforementioned " Alternative Investment & Operations" strategy to grow from proprietary investing to leveraging third-party capital; we will also strengthen our fee-based business model by increasing the assets under management (AUM) from the current 74 trillion yen, which is centered on public assets such as listed stocks and bonds, to 100 trillion yen by focusing on alternative and real assets.

Creating exciting work through top-down initiatives

There is no doubt that the most important factor in putting our purpose into practice, realizing our long-term vision, and achieving our medium-term plan is our people. We are constantly striving to create exciting work, a comfortable working environment, and market-competitive compensation to enhance employee motivation and support their growth, as well as to strengthen our ability to attract external talent. My own domestic and international experience has been invaluable, and I firmly believe that globally competitive talent is the key to the sustainable growth of the entire Group.
Since assuming the role of COO, I have consistently communicated three key messages to all Group employees.
The first is “Promoting Collaboration." There are many business opportunities that can be found in the space between segments and regions, and we hope to create new value through opportunities for collaboration that transcend boundaries.
The second is "Deepening and Evolving our Business Model." "Deepening" refers to enhancing expertise, while "Evolving" means growing the business or expanding into new stages. We aim to enhance business value by balancing both of these aspects.
The third is "Becoming Global Talent." In global collaboration, a foundation of common language and communication as well as an understanding of different cultures is essential. My own experiences working in our overseas operations, including various events and the many human connections I have built, have become valuable assets.

It has been seven months since I assumed the role of COO. While I am acutely aware of the weight of my responsibility, I am determined to approach this role with resolve and contribute to shaping the future of ORIX. We kindly ask for the continued support and cooperation of all of our stakeholders as we move forward into the future.