PE Investment and Concession

Our Approach to Our Sustainability Themes

PE Investment
We are committed to management for sustainability among investees as a means to improve corporate value.

• We recognize the importance of reducing CO₂ emissions among investees, and engage in collaboration by jointly devising relevant initiatives such as replacing equipment and switching to renewable energy.
• Enhancing compliance and governance among investees is a priority. We emphasize optimized labor management and thoroughgoing fraud prevention and safety management.
• We focus investment on industries that contribute to resolving social issues. Our goal is to contribute to the SDGs through the businesses in which we invest.

Concession

• In April 2023, Kansai Airports launched a new environmental plan, Environmental Vision 2050 and Environmental Goals 2030[1.27MB]. The new plan encompasses greenhouse gas emission reduction, resource recycling, environmental monitoring, and biodiversity. We have set specific goals for 2030 as milestones for achieving our long-term vision and goals, centered on decarbonization, circular economy, and environmental symbiosis.
• At water supply and sewage concessions in Hamamatsu City and Miyagi Prefecture, ORIX is proactively involved in building a circular economy and sustainable local communities. We are committed to preserving water quality, preventing air pollution, controlling odors, conserving energy, reducing and recycling sludge, and contributing to a society that reuses and recycles with management that includes voluntary standards that are more rigorous than relevant laws and regulations.

Business Activities and Sustainability Themes Matrix

PE investment in solving social issues

• #Climate change / Reducing GHG emissions
• #Investments and lending that take ESG into account
• #Promoting health・Extending healthy life expectancy
• #Improving labor productivity
• #Decreasing workforce
• #Promoting innovation & technological change

Our PE investment business makes investment decisions based on the ORIX Group Sustainable Investment and Lending Policy. Post-investment, we prioritize hands-on management, and work to improve the investee's corporate value by partnering together with company management and supporting marketing efforts. We require investees to conduct their management sustainably as a means to increase corporate value.
Our focus areas for investment include healthcare, business process outsourcing (BPO), IT & information services, and logistics and rental. These businesses are all in industries which contribute to solving social issues, such as health maintenance and disease prevention, improving productivity, reducing manpower, promoting digitalization, and utilizing information technology. We focus on uncovering promising investees, as we expect growth in these industries. We had private equity investments in 18 companies as of March 31, 2023.
Reducing greenhouse gas emissions is a key theme for our businesses, so we have calculated GHG emissions at each consolidated investee and have begun to consider reduction initiatives. Of our 18 investee companies, three have relatively high levels of emissions (two have manufacturing facilities, one uses trucks and forklifts to transport materials). They are addressing this matter in ways such as replacing production equipment, conversion to different fuel sources, using renewable energy (including installation of solar panels and captive consumption), and transitioning to LED lighting and EVs.

Concession business: Supporting regional infrastructure

• #Climate change / Reducing GHG emissions
• #Regional vitalization
• #Addressing aging public infrastructure

In the concession business, private enterprises are responsible for the operation of public facilities such as airports, roads, and water supply and sewage systems, while public entities retain ownership. To address social issues such as an aging infrastructure and population decline, the Japanese government is promoting concessions to revitalize local economies and enhance fiscal soundness through infrastructure improvement, and ORIX Group is energetically answering this call.
Our first concession business was Kansai Airports, which was the first full-fledged airport management business by the private sector in Japan and took over the operation of both Kansai International Airport and Osaka International Airport. Kansai Airports, which was established by a consortium led by ORIX and VINCI Airports of France, began operating both airports from April 1, 2016. In addition, ORIX Group began the operation of Kobe Airport from April 1, 2018 through a subsidiary. The operation periods of Kansai International Airport and Osaka International Airport are long term at 44 years, with Kobe Airport having an operating period of 42 years. We aim to balance our social responsibility as public infrastructure operators with our private sector creativity and dynamism to continue to develop the three airports and the Kansai region where these airports are located.
To increase routes and passengers to the airports requires enhancing the attractiveness not only of the airports, but also of the surrounding areas. Kansai Airports is constantly enhancing its airport facilities and collaborating with local businesses and governments to increase business and tourism demand.
Kansai Airports has set an Environmental Philosophy and Basic Environmental Policy for reducing environmental load. In March 2023, the company created a new environmental plan, Environmental Vision 2050 and Environmental Goals 2030, with the aim of achieving carbon neutrality by 2050. The plan outlines goals within the three pillars of decarbonization, circular economy, and environmental symbiosis, through which Kansai Airports will contribute to solutions for global-scale environmental issues.

In Hamamatsu City, Shizuoka Prefecture, ORIX Group began operation of the Hamamatsu City Public Wastewater Treatment Plant (Seien Treatment Area), the first domestic concession business in the water supply and sewage sector, on April 1, 2018. The operating company is Hamamatsu Water Symphony K.K. (HWS), which was established jointly by ORIX Group and local companies as well as Veolia Japan, with a project duration of 20 years. By leveraging the unique expertise of each HWS shareholder company, we aim to provide safe and secure sewage services to the local population. In addition to reducing the environmental impact of the plant through our environmentally conscious business management policies, we are also planning measures to realize a sustainable Hamamatsu City, such as participating in activities supporting regional industry and events.

In Miyagi Prefecture, the Miyagi Prefecture Integrated Water Supply, Industrial Waterworks, and Sewerage Public-Private Partnership Management Project was launched in April 2022. In this project, Mizumusubi Management Miyagi, K.K (an operation company) and Mizumusubi Service Miyagi (maintenance and management company), which were established as a consortium of ten companies^* including ORIX, are entrusted with the operation of Miyagi Prefecture's water supply business, industrial waterworks business, and sewerage business facilities for a period of 20 years. The company name “Mizumusubi” (“to connect water”), which was chosen as it embodies multiple meanings: connecting Miyagi Prefecture's three water businesses (water supply, industrial waterworks, and sewerage) with water-related companies; connecting Miyagi Prefecture's water infrastructure—which has been maintained thus far—with the future; and realizing sustainable water supply, industrial waterworks, and sewerage services.

• Ten shareholder companies are METAWATER Co., Ltd., Veolia Jenets K.K., ORIX Corporation, Hitachi, Ltd., Nihon Suido Consultants Co., Ltd., HASHIMOTOTEN Co., Ltd., Fukken Gijyutsu Consultants Co., Ltd., SANDEN KOGYO CORPORATION, TOKYU CONSTRUCTION CO., LTD., and METAWATER SERVICE Co., Ltd.

From April 2023, ORIX began its involvement in the operation and maintenance of Todoroki Ryokuchi Park as part of the Todoroki Ryokuchi Park Redevelopment, Operation, Etc. Project in Kawasaki City, Kanagawa Prefecture.
The project includes redevelopment and operation of Todoroki Ryokuchi Park in an integrated manner and aims to achieve its future vision for the park, which is owned by Kawasaki City. The project is being implemented based on the Act on Promotion of Private Finance Initiative (PFI).
Nine firms, including ORIX, have established the Kawasaki Todoroki Park Company (KTP), which will operate the park over a 30-year period while both maintaining existing facilities and updating aging infrastructure.
KTP’s aim is to create “Japan’s Happiest Park,” and it will endeavor to make Todoroki Ryokuchi Park, a comprehensive park with athletic facilities and civic spaces, into a bustling space central to the region.

Related Links

• Kansai Airports
• Hamamatsu Water Symphony K.K.(in Japanese)
• Mizumusubi Management Miyagi / Mizumusubi Service Miyagi(in Japanese)
• Kawasaki Todoroki Park(in Japanese)