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At its inaugural ORIX Investor Day in London this July, ORIX communicated its Growth Strategy 2035, a plan to move to an asset management model that accelerates growth while also lifting financial returns – with a target of reaching a 15% return on equity. Under the new strategy, more and more of the assets that ORIX originates (and will continue to operate) can be shifted to this new management platform – from aircraft and ships to real estate and renewable energy equipment, spanning opportunities in both public and private markets. And by bringing in third-party funds to provide financial muscle to augment its own balance sheet, the Group will be able to scale these businesses much more rapidly than in the past.
This new approach did not come out of nowhere. It is based on experience: embedded within the Group's portfolio are two businesses that have been living the logic of the new strategy for years - and are positioned to show the rest of the organization how it is done.
ORIX Aviation, based in Dublin, and Robeco, headquartered in Rotterdam, sit at the heart of two of the Group's three newly created ‘vertical’ units: Japan & APAC, USA & Europe and Infrastructure. They are led by executives who are also ORIX Group Executives with a mandate that extends well beyond their own businesses. In the story of ORIX's transformation, they are both case studies and catalysts.
Built to fly
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ORIX Aviation has been in the aircraft leasing and financing business for 35 years - longer than any other company in the industry under the same shareholder. Today it manages approximately $12 billion of aircraft assets, with around 120 staff based primarily in Dublin and Dubai, and a further 30 executives in Tokyo dedicated to the Japanese investor base.
James Meyler, Group Executive of ORIX and Chief Executive of ORIX Aviation, is emphatic about what distinguishes the business from its peers. "We touch the metal, we move the metal, we're involved in engines and parts and aircraft," he says. “That has always been a differentiator for ORIX versus other investment houses."
The distinction matters. Approximately one third of ORIX Aviation's fleet is owned, with two thirds managed for third-party investors, including Japanese family offices and high-net-worth individuals, as well as US private equity firms and financial institutions worldwide. In that sense, the new group strategy is less a transformation for ORIX Aviation than an invitation to accelerate. "ORIX has been an exceptional allocator of capital in aviation, with returns that have outsized most industry peers. So, for us, the new strategy is really about scale," says Mr. Meyler. "Do what we've been doing but do it bigger." The target is to grow from around 250 aircraft to 500 within three years, maintaining a similar funding mix but generating proportionately more fee income along the way.
The new strategy also opens adjacent doors. ORIX Aviation is moving into engine leasing and the parts business - areas that draw directly on its existing technical depth. And its network of relationships creates cross-pollination opportunities well beyond the aerospace sector. "We constantly are dealing with some of the large private equity firms in the US, many of the large institutional banks and sovereign wealth funds," says Mr. Meyler. "With that, it opens doors across the group: new opportunities for ORIX across not just aviation but into private equity, real estate, and other investment opportunities."
Looking further ahead, Mr. Meyler is sanguine about risk. The structural dynamics of the aircraft market - some 20,000 new aircraft, worth $1 trillion, are required over the next two decades, with no new product offering available within the next 10 years. This creates an unusual degree of long-term visibility. "It's actually quite an unusual business in that there is a large moat around the next 10 to 20 years in terms of demand," he says. "We have successfully lived through five major crises since ORIX Aviation was formed, and every time its resilience has proved that aircraft values recover very, very quickly. So, we know we can straddle any short-term crises with our long-term view and long-term strategy."
A century of investment discipline
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Where ORIX Aviation exemplifies the Infrastructure Unit's asset-light ambitions, Robeco occupies an equally central place in the USA & Europe vertical. Recently surpassing 400 billion euros in client assets, Robeco is a pure-play asset manager with Dutch roots and a genuinely global footprint, with investment hubs in Singapore, Hong Kong, Zurich, London, and Rotterdam. Its expansion is a testament to the organic growth that can be generated with a sound platform.
Karin van Baardwijk, Group Executive of ORIX and Chief Executive Officer of Robeco, describes its defining characteristic in terms that go to the heart of what the wider ORIX Group is now trying to build. "Asset management is our bread and butter. The one thing that we absolutely have in our DNA is understanding that we live by the grace of our clients," she says. "The fiduciary part of asset management - where everything should start with your client in mind - is key."
For Robeco's employees, the new ORIX strategy carries a particular resonansce. "People are the key asset of an asset manager. And for many of our employees, to see asset management being spotlighted in the strategy of your shareholder is a very strong sign of commitment to this type of business," says Ms. van Baardwijk. "And for our clients, to see full alignment between Robeco's strategy and ORIX's strategy is an absolute sign of strength."
Beyond that affirmation, Robeco has a concrete role to play as a knowledge carrier across the Group. Its experience in servicing clients, managing talent, and building a durable investment culture are directly transferable - even where the asset class differs. Ms. van Baardwijk sees the boundary between public and private markets as more permeable than it might appear. "Private market asset management is different than public, but there are so many overarching similarities. We are looking at the potential of how public markets and private markets can be brought together. And the good news is that ORIX has both on its platform."
Turning this into reality is the goal of the new USA & Europe vertical that includes the broad range of both Robeco and ORIX’s public and private market investment capabilities. Now united under one leadership, the two arms are already working to develop unified client service for institutional investors that wish to draw on both public and private market capabilities. And Ms. van Baardwijk sees technology - specifically AI - and how ORIX makes use of it, as both the sharpest external risk and the most significant opportunity. "The winners and the losers in technology will play out pretty quickly," she says. "The winners will be the ones who are able to really tap into the potential of technology and apply it into the business practices inside of the investment engine, but also to become faster, more efficient, and speed up time to market. AI will definitely disrupt not what we do, but how we do it."
The view from the frontier
Both Mr. Meyler and Ms. van Baardwijk carry a dual mandate. As CEOs of their respective businesses, they are accountable for performance. As Group Executives, they are part of something broader: helping ORIX realize the full potential of its new strategy, including in businesses far from Dublin and Rotterdam, where they are based respectively.
On the 2035 targets of 1 trillion yen in net income and 15% return on equity, both are measured but confident. Within the Infrastructure vertical, the transportation businesses (including ORIX Aviation and shipping) are already close to the 15% ROE target. "We want to be targeting even higher than that," Mr. Meyler notes. Ms. van Baardwijk is equally direct: "The targets are ambitious, but it's always good to aim high."
The reorganization into three verticals has already made a practical difference to how both executives operate - creating cleaner lines into the three new COOs and more frequent touchpoints across the portfolio. "The real shift," says Mr. Meyler, "is the fact that it's just three key executives. The opportunity for crossing businesses, crossing opportunities, is far easier." Ms. van Baardwijk agrees that the simplified structure brings strategic clarity without closing off collaboration: "It doesn't mean that if you're part of one business line in ORIX, you can't connect and share knowledge with the other."
There is perhaps no better illustration of the ORIX Group's ambition than the fact that two of its most internationally sophisticated businesses are not merely beneficiaries of the new strategy. They are its most committed advocates, and can show the rest of the Group the way forward as the Group shifts more and more of ORIX’s assets to the new differentiated asset management model.
