ORIX Group has grown spectacularly since its foundation 60 years ago. Starting as an Osaka-based leasing company in Japan, it has evolved into a global corporate group operating in over 30 countries with 10 business segments that span financing, asset management, real estate, insurance, banking, energy, environmental services, and, of course, leasing.
In the last 10 years, the Group has nearly doubled assets to 16 trillion yen and it announced record financial results for the fiscal year ending March, 2025, with net profits reaching over 350 billion yen. It also announced a goal of reaching 1 trillion yen in net profit by 2035.
Now ORIX is operating at this scale, management believes the time has come to adapt strategy and focus more also on profitability, specifically on raising return on equity (ROE) from just under 9% now to 15% by 2035, with a key medium-term target of 11% in the fiscal year ending March 2028.
“So far, we have focused mainly on the absolute profit growth of each business unit,” says President and Group COO Hidetake Takahashi. “In the future, in order to achieve efficient capital utilization, we will manage ORIX with an emphasis on ROE in addition to conventional profit growth.”
Why now? Capital Efficiency and Purpose
There are several reasons for taking a new approach at this point. The first, as Mr. Takahashi notes, is that given its current size, the investors and markets that provide ORIX with funding are starting to pay attention to measures of capital efficiency as well as absolute profit levels and sheer balance sheet size.
Allied to that, ORIX, as an increasingly global group, is being compared – and, indeed, wants to be measured against – the best financial companies in the world. Private equity firms such as Apollo and KKR and fee-based asset managers like BlackRock consistently achieve ROE levels of 15%.
“This is why we intend to allocate capital at a finer granularity than the segment level from now on,” adds Mr. Takahashi, “and we will monitor the ROE of each business unit, as well as focusing on disciplined portfolio management and thoroughly reorganizing assets.”
Finally, having established its Purpose & Culture, under the slogan “Finding Paths. Making Impact.” in November 2023 and rolled it out across the company over the past 18 months, management saw a unique opportunity to place Purpose – the reason why ORIX exists -- at the heart of a new business strategy.
As Nobuki Watanabe, Executive Officer, Group Strategy Business Unit, who is responsible for the CEO’s Office, explains: “Since the establishment of our Purpose & Culture, many of our leaders around the world have been pointing to the need for a business strategy tailored to help realize our Purpose.”
It also became clear to the senior leadership during the Purpose Activation Project that while most employees understood and related to the Purpose & Culture, they wanted a clearer sense of where this was going to take the company in the future.
In addition, ORIX’s external board directors noted that since the company had become such a large Group, it needed to clarify its strategy and direction. In response to all these voices, management formulated the new ORIX Group Growth Strategy 2035.
The Strategy: Focus Areas x Business Models
Using the Group Purpose of “Finding Paths. Making Impact.” as a framework, management has established three Focus Areas that ORIX will use to guide growth into the future. At the bottom lie ORIX Group's two foundational operational strengths, which can also be described as two types of business model: Alternative Investment & Operations; and Business Solutions.
The elements that make up those two business models – such as efficient, fee-generating asset management – are what differentiate ORIX; and each business unit will use the most appropriate elements of these business models to allocate resources in a way that reduces capital outlays and maximizes returns. The new approach promises capital and operational support to those ORIX segments and business units that can find a path to growth and make an impact.
The Business Models: Foundational Strengths
The two ‘business models’ are attempts to describe how ORIX business units operate in practice – and to identify their key characteristics and strengths as they seek to build and extend their activities across the two business models.
The model can be broken down into five sub-categories that move from customer-facing businesses on the far right, to market-facing businesses, asset management, operations and alternative investment, which deals with intangible assets, on the far left.
Customer Solutions represents the corporate sales businesses that provide tailored financing products and services for customers including small and medium-sized enterprises and family businesses, where ORIX currently has a market leading position in Japan.
Market Solutions, meanwhile, enables ORIX businesses and its customers’ businesses to operate on a platform basis that offers universal solutions and brings in fee income, again leading to higher ROE.
In Alternative Investment, on the far left, ORIX invests in and finances a variety of business assets, including financial assets, real estate, and PE investments, and has developed the ability to select high-quality projects.
In Operations, the Group not only invests and finances, but also uses its operational know-how to improve performance through hands-on management and monitoring of assets such as equipment, auto fleets and renewable power plants, for example through its Spanish energy company Elawan.
The aim is to evolve more businesses into the Asset Management model in the middle, where they can move assets off the balance sheet while retaining fee-based management contracts – an asset-light approach that should boost ROE. The fact that ROBECO, the Netherlands-based asset manager, is also part of the Group and has a focus on investing with impact, will be important in enabling this evolution.
“Evolving and deepening these business models in which ORIX has built up knowhow over many years will enable ORIX to position itself in the growth markets it intends to target going forward,” points out Mr. Takahashi.
This strategy also takes advantage of the unique coverage ORIX has dealing face-to-face with customers, providing packaged solutions to markets, managing assets, operating assets, and making alternative investments in tangible assets like infrastructure and aircraft. This breadth of businesses and diverse expertise within the Group will lead to new business models that build on existing expertise, for example by applying the aircraft leasing model to other businesses in the Group.
“There will be many business opportunities that will be created not only within each segment but also between segments in the future, so we need to transcend the boundaries of segments and regions and "combine innovative thinking and diverse expertise to find pathways to impact in a world of change,” as outlined in our Purpose,” indicates Mr. Takahashi.
The Focus Areas: Impact, Growth, Pathways
Layered on top of the two business models are three Focus Areas. “These represent three "strategic investment areas" and the names indicate what ORIX will do in each: IMPACT, GROWTH, and PATHWAYS,” explains Mr. Watanabe.
PATHWAYS aims to achieve new areas of impact for the future economy with a focus on technological evolution, both by investing in new technologies; and by using such technologies to create innovative businesses. A big focus will be building the infrastructure for the rapidly expanding IT domain, particularly related to AI and Digital Transformation more generally. Other examples include Business Process as a Service (BPaaS), new mobility services and space-related activities, including satellites.
GROWTH aims to support sustainable growth in a changing world and addresses the needs of an expanding global population, which will need support to invest a growing pool of financial assets – and to finance ever longer lifespans. Areas here include Alternative Investment, Wealth Management and expanding ORIX’s successful financing and investment operations across Asia-Pacific. At the same time, the fact that the world’s middle class is increasing rapidly, and more people have more leisure, brings opportunities for the group’s hospitality and leisure segments, which includes hotels, aquariums, and Japan’s first integrated resort in partnership with MGM.
Under IMPACT, business units will focus on making a positive impact on issues within the themes of global warming and limited resources, in areas such as renewable energy, low-carbon or carbon-free energies, and businesses with a low environmental impact, as well as those that contribute to the circular economy. In a world of limited, depleting resources and continued population growth, it is important to invest strategically and steadily into clean energy to further decarbonization, using Group companies like Elawan Energy as global platforms, and to drive forward the circular and shared economy – for example through recycling, refurbishment and environmentally-conscious disposal.
“As we have done in our renewable energy business, building success in these focus areas will rely on operating select types of businesses as global or regional platforms connecting the latent potential that lies within our Group’s existing businesses,” says Mr. Takahashi.
Tackling the Future
With the global economic environment remaining highly uncertain, Mr. Takashi points out that ORIX will retain the flexibility and ability to change course and adapt to circumstances that have been a key to its success in the past, but the ultimate aim is to “Make impact through alternative investments, operations and business solutions,” he says.
In pursuit of a higher level of profitability, the new Growth Strategy is more granular than usual for ORIX, but as the COO notes: “This strategy is only an overarching direction for the future, and it should work in harmony with ORIX Group's Purpose of combining innovative thinking and diverse expertise, bottom-up.”
In other words, as in the past, so in the future: ORIX will keep its eye on the goal of continuing to increase profits, but also raising profitability so it can make more impact in the markets in which it operates – and help to shape them. As ORIX evolves over time, it will contribute to revitalizing communities, help individuals to realize their full potential and enable the world to develop in a sustainable way
How it gets there will be a question of remaining agile and “Finding Paths” on a journey into the future: continuing to create a unique corporate group with roots in Japan but the intention of “Making Impact” globally.
