ORIX Corporation

3-22-8, ShibaMinato-ku
Tokyo 105-8683
Japan
Telephone: (81)3 5419-5000
Fax: (81) 3 5419-5903
Web site: http://www.orix.co.jp

Public Company
Incorporated: 1964 as Orient Leasing Company, Ltd.
Employees: 9,529
Sales: ¥586,149 million ($47.3 billion) (2001)
Stock Exchanges: Tokyo Osaka Nagoya New York
Ticker Symbol: IX
NAIC: 532412 Construction, Mining, and Forestry Machinery and Equipment Rental and Leasing; 532411 Commercial Air, Rail, and Water Transportation Equipment Rental and Leasing; 53242 Office Machinery and Equipment Rental and Leasing; 53249 Other Commercial and Industrial Machinery and Equipment Rental and Leasing; 52231 Mortgage and Nonmortgage Loan Brokers; 52421 Insurance Agencies and Brokerages

ORIX Corporation began as a Japanese-American joint venture in the mid-1960s, and helped introduce Japanese business to the idea of leasing its equipment instead of owning it. Now a multinational corporation and Japan’s largest general leasing firm, ORIX operates as a diverse financial services group involved in leasing, lending, rentals, life insurance, real estate financing and development, venture capital, investment and retail banking, commodities funds, and securities brokerage. The company serves over 500,000 small and medium sized businesses as well as individuals in North America, Europe, Asia, Oceania, the Middle East, and Northern Africa. In 1964, Nichimen Company—later known as Nichimen Corporation—and the United States Leasing Corporation established the Orient Leasing Company (OLC) in Osaka. Backed by the Sanwa Bank, the company began with an initial capital of ¥100 million. At this time, leasing was very new in Japan. Growth was slow throughout the 1960s as Japanese business adjusted to the idea.

Early Growth: 1970s

OLC spent much of the 1970s establishing itself throughout Asia, developing a pattern of growth either through ties with well-established local businesses or through heavy investment in local companies. In 1970, OLC was listed on the second section of the Osaka Stock Exchange; by 1973 it was on the first section in Tokyo, Osaka and Nagoya. The following year, the company established its first wholly owned subsidiary, Orient Leasing (Asia), in Hong Kong. The subsidiary handles mortgage loans, finances in multiple currencies, and leases major items like ships and planes. In 1972, OLC established its first major subsidiary in Japan, Orient Leasing Interior Company. That same year, Orient Leasing established the Korea Development Leasing Corporation and Orient Leasing Singapore, which leased vehicles, machinery, furniture, medical and dental equipment, and vessels. In 1973, OLC entered Malaysia; in 1975, Indonesia; in 1977, the Philippines; in 1978, Thailand. OLC also established subsidiaries in South America during the 1970s, entering Brazil in 1973 and Chile in 1977. Orient Leasing began to lease commercial aircraft in 1978, when the company purchased a DC-10 from McDonnell Douglas and two Boeing 747 passenger jets for lease to Korean Air Lines. The company purchased another aircraft in the same deal for lease to Thai Airways International. This deal, part of a joint venture with Nippon Shinpan Company, came at a time when American aircraft manufacturers were complaining that limited export funding was making it difficult for them to compete internationally. According to the Wall Street Journal, the purchases were arranged in an effort to show genuine Japanese concern for reducing its trade surplus. Later in 1978, OLC purchased two wide-bodied airbuses with C. Itoh & Company for lease to Greece’s Olympic Airways.

International Expansion in the 1980s

While Orient Leasing spent the 1970s establishing itself in Asia, the 1980s were a time of expansion in the United States, Europe, and China, one still untapped Asian market. OLC brought leasing to a developing China in 1981. In partnership with two Chinese companies, China International Trust and Investment Corporation and Beijing Machinery and Equipment Corporation, OLC founded the China Orient Leasing Company. Leasing in China boomed in the following years, as state-owned enterprises demanded machinery for their outdated factories. In 1984, China Orient Leasing Company wrote $40 million in contracts, three times the amount it had written just two years earlier, for equipment as varied as plant machinery, film development equipment, and printing presses. In 1982, Orient Leasing opened a representative office in Greece, and in 1983, the company established Orient Leasing (UK) in London, its first step toward an independent presence in Europe. Growth continued in 1986 with the establishment of Lombard Orient Leasing Ltd., a partnership between OLC and Lombard North Central, the largest finance company in the United Kingdom. In 1988, OLC expanded further into Europe when it made an agreement to form a leasing company in Spain to lease Japanese computers and office equipment. In America, OLC set up Orient Leasing USA Corporation in 1981 and Orient-U.S. Leasing Corporation in 1982. In the late 1980s, OLC began to diversify, investing in the Hyatt Group, a hotel chain, and Rubloff Inc., a major Chicago real estate company. With the Hyatt Group, OLC arranged financing for hotels in Chicago, Illinois; Greenwich, Connecticut; and Scot-tsdale, Arizona. Most of the equity financing came directly from OLC and Hyatt; OLC assembled Japanese investors to cover the rest. In 1987, Orient Leasing entered the American real estate market when it bought a 23.3% interest in Rubloff. Willard Brown, Jr., the chairman of Rubloff, told the Chicago Tribune, ” (Orient Leasing) has a substantial appetite, and (Rubloff’s) job will be to create the right investments for them.” OLC entered the housing loan and mortgage security loan markets in the early 1980s. OLC also diversified into securities in 1986, surprising the leasing community with the purchase of Akane Securities Company, Ltd., a small Japanese brokerage firm. Though lease-financing was its core business, through this purchase the company announced its intention to initiate “new operations in related, high-potential fields.”

Orient Leasing Renames Itself ORIX Corporation: 1989

As part of its plan to diversify, Orient Leasing renamed itself ORIX in 1989, the company’s 25th anniversary. According to company officials, the name ORIX was adopted as an abbreviation of “original,” with the “X” added to symbolize a future of “flexibility and diversity.” As part of a campaign to increase recognition of its new name, ORIX bought a Japanese baseball team, the Hankyu Braves, and renamed it the ORIX Braves. The leasing business soared in Japan in the late 1980s, fueled by heavy capital investments by Japanese industry. It became such an attractive business, in fact, that many new companies entered the field, pushing profit margins below one percent even for industry-leader ORIX, according to The Economist. The firm’s name change signaled the most visible part of the company’s move to broaden the financial services it offered in order to decrease its reliance on the leasing business.

Continued Diversification throughout the 1990s

Despite a weakening Japanese economy and instability throughout the entire Asian region, ORIX remained intent on diversification throughout the 1990s. Aiding in its efforts was its status as a leasing company—a status that allowed it to report to Japan’s Ministry of International Trade and Industry, while banks and securities brokers were forced to report to the strict Ministry of Finance. The trade ministry’s liberal policy enabled ORIX to pursue diverse expansion options. Building upon its 1989 investment in U.S.-based Stockton Holdings Ltd., the company began selling commodities funds in Japan in 1990 and entered the investment management business by creating ORIX Commodities Corp. The firm also purchased outright—rather than financed—74 Airbus Industrie jets from Braniff Airlines Inc. ORIX then sold or leased the jets to different airlines.

In 1993, the company established Shanghai Yintong Trust Co. to operate as one of the first joint consumer credit companies in China. The following year, ORIX teamed up with the Bank for Investment and Development of Vietnam to create ORIX BIDV Leasing Co. Ltd., the first leasing company in Vietnam. The firm also focused on its real estate operations and in 1995, partnered with Daikyo, Inc., an apartment management service company, to expand and develop real estate and lending opportunities. In order to increase its presence in Taiwan, ORIX acquired two leasing credit firms, Sun Leasing Corp. and Sun Credit and Trading Corp., in 1995. Having entered the region in 1990 with the creation of subsidiary ORIX Taiwan Corp., the firm eyed Taiwan as a lucrative market due to the financial deregulation initiated by the Taiwan government that enabled leasing and credit sales firms to embark on lease financing ventures.

As the Asian economy fell under financial crisis in the mid-to-late 1990s, ORIX continued its global expansion efforts. The firm announced plans to enter the Egyptian market in 1997, and continued to take advantage of U.S.-based opportunities. That year, ORIX began a joint venture with Banc One Corp. and formed commercial mortgage firm Banc One Mortgage Capital Markets. In 1998, General Electric Capital Services Inc. entered Japan’s leasing market, dramatically increasing competition due to its financial size and expertise in leases related to industrial machinery. While ORIX held an eight percent share of that market and stood as the leader, the firm faced fierce competition and continued to look for ways to bolster profits outside of the leasing arena. ORIX acquired Yamaichi Trust & Bank Ltd. that year, broadening its line of financial services that by now included insurance and brokerage, along with leasing operations.

Company Perspectives:

ORIX seeks to contribute to society through its sophisticated and global financial services by constantly anticipating market needs to offer new and innovative products that create real and lasting value for our customers.

ORIX also listed on the New York Stock Exchange in September 1998, the first Japanese company to list on the NYSE since 1994. In 1999, ORIX began take advantage of the burgeoning e-commerce world. The firm teamed up with Softbank Corp. and Fuji Bank to create a joint Internet-based leasing venture that offered financial services to small-to-mid-sized companies in technology industries. The Japanese government deregulated fixed commissions on stock transactions in October 1999, allowing ORIX to begin online trading. Through its ORIX Securities subsidiary, the firm secured 12,600 online accounts by November of that year.

Focus on Diversified Financial Services in the New Millennium

ORIX entered the new millennium on strong ground. Company management was restructured, leaving Yasuhiko Fujiki as president and Chief Operating Officer, while Yoshihiko Miyauchi remained chairman and CEO. In January 2000, the firm formed an alliance with U.S.-based Enron Corp., allowing it to enter the Japanese retail power market with plans to form new power generation facilities.

In 2001, ORIX continued to develop and diversify its product and service offerings. Real estate firm Nihon Jisho Corp. was acquired, broadening ORIX’s reach in the real estate and management industry. The firm also continued to increase its Internet-based offerings with the launch of e-Direct Deposit, allowing its customers to conduct business transactions via the Web. Its auto leasing business also began a program entitled e-ERG, which allowed leasing customers to manage their accounts online. With a continued emphasis of expanding its financial services product line, ORIX appeared well positioned for future growth.

Principal Subsidiaries

ORIX Alpha Corp.; ORIX Auto Leasing Corp.; ORIX Aircraft Corp.; Sun Leasing Co. Ltd.; ORIX Real Estate Corp.; ORIX Asset Management and Loan Services Corp.; ORIX Estate Corp.; ORIX Rental Corp.; ORIX Rent-a-Car Corp.; X-Rent-A-Car Corp.; BlueWave Corp.; ORIX Credit Corp.; ORIX Club Corp.; ORIX Computer Systems Corp.; ORIX Securities Corp.; ORIX Capital Corp.; ORIX Life Insurance Corp.; ORIX Insurance Services Corp.; ORIX Insurance Planning Corp.; ORIX Interior Corp.; ORIX Investment Corp.; ORIX Commodities Corp.; ORIX Trust and Banking Corp.; ORIX Create Corp.; ORIX Management Information Center Corp.; ORIX Call Center Corp.; ORIX Baseball Club Co. Ltd.; ORIX Investment and Management Private Limited (Singapore); ORIX Leasing Singapore Ltd. (50%); ORIX Car Rentals PTE LTD (Singapore; 45%); ORIX Commodities Singapore PTE Limited; ORIX Asia Ltd. (China); Global Rental Co. Ltd. (South Korea; 26%); ORIX Car Rentals SDN. BHD. (Malaysia; 28%); Infrastructure Leasing & Financial Services Ltd. (India) (20%); Austral Mercantile Collections Pty. Ltd. (Australia) (50%); ORIX Leasing Pakistan Ltd. (57%); ORIX USA Corp.; ORIX Europe Ltd. (U.K.); ORIX Polska S.A. (Poland; 89%).

Principal Competitors

GE Capital Corporation; Mitsubishi Tokyo Financial Group Inc.; Sumitomo Corporation.

Key Dates:

1964:

Nichimen Co. and the United States Leasing Corp. establish the Orient Leasing Company (OLC).

1970:

OLC lists on the second section of the Osaka Stock Exchange.

1972:

Subsidiaries Orient Leasing Interior Co., Korea Development Leasing Corp., and Orient Leasing Singapore are formed.

1978:

OLC begins leasing commercial aircraft.

1981:

The firm enters the Chinese market and forms Orient Leasing USA Corp.

1983:

Orient Leasing UK is established.

1986:

The company acquires Akane Securities Company Ltd.

1987:

OLC enters the U.S. real estate market through a 23.3 percent purchase of Rubloff Inc.

1989:

The firm officially adopts the name ORIX Corporation.

1990:

ORIX begins selling commodities funds in Japan.

1993:

Shanghai Yintong Trust Co. is established as China’s first joint consumer credit company.

1994:

Company announces plans to set up a joint leasing venture in Vietnam.

1997:

ORIX enters the Egyptian market.

1998:

ORIX lists on the New York Stock Exchange; it also acquires Yamaichi Trust & Bank Ltd.

2000:

The company’s management restructures; Yasuhiko Fujiki is named company president and Chief Operating Officer.

2001:

The real estate firm Nihon Jisho Corp. is acquired.

Further Reading

“GE Capital Strategy Keys On Acquisition,” Nikkei Weekly, August 3, 1998.

Jarman, Max, “Banc One, ORIX Form Commercial Mortgage Firm,” Arizona Business Gazette, April 3, 1997, p. 3.

Lau, Shirley, “ORIX Launch Aimed at Doubling Customer Base,” South China Morning Post, March 14, 2000, p. 2.

“Leasing Company Begins Negotiating to Acquire Yamaichi Trust Bank,” Nikkei Weekly, December 29, 1997, p. 13.

“ORIX Acquires Two Taiwan Leasing, Credit Firms,” Japan Economic Newswire, August 16, 1995.

“ORIX Launches China’s First Consumer Credit Business,” Japan Economic Newswire, October 7, 1993.

“ORIX to Enter Investment Management Business,” Japan Economic Newswire, January 31, 1990.

“ORIX to Enter Retail Power Market,” Nikkei Weekly, January 10, 2000, p. 19.

“ORIX to Set Up Vietnam Lease Joint Venture,” AFX News, December 16, 1994.

Plender, John, and Gillian Tett, “Inside Track: the Shareholder Fundamentalist: Interview Yoshihiko Miyauchi,” Financial Times (London), March 30, 2000, p. 14.

Sterngold, James, “Japanese Lessor Thrives Under Loose Regulation,” New York Times, July 27, 1990, D1.

—update: Christina M. Stansell

Orix Corporation

World Trade Center Building
2-4-1, Hamamatsu-cho
Minato-ku
Tokyo 105
Japan
(03) 435–6641

Public Company
Incorporated: 1964 as Orient Leasing Company, Ltd.
Employees: 4,000
Assets: ¥2.6 trillion (US$20.8 billion)
Stock Index: Tokyo Osaka Nagoya

Orix Corporation is Japan’s largest general leasing firm. The company began as a Japanese-American joint venture in the mid-1960s, and helped introduce Japanese business to the idea of leasing its equipment instead of owning it. Now a multinational corporation, Orix leases computers, office equipment, cars, trucks, ships, and jumbo jets to businesses across Asia, Europe, and the United States, and also offers loans, direct financing leases, installment sales, and consumer credit.

In 1964 Nichimen Company (now Nichimen Corporation) and the United States Leasing Corporation established the Orient Leasing Company (OLC) in Osaka. Backed by the Sanwa Bank the company began with an initial capital of ¥100 million. At this time, leasing was very new in Japan. Growth was slow throughout the 1960s as Japanese business adjusted to the idea.

OLC spent much of the 1970s establishing itself throughout Asia, developing a pattern of growth either through ties with well-established local businesses or through heavy investment in local companies.

In 1970, OLC was listed on the second section of the Osaka Stock Exchange; by 1973 it was on the first section in Tokyo, Osaka and Nagoya. The following year, the company established its first wholly-owned subsidiary, Orient Leasing (Asia), in Hong Kong. The subsidiary handles mortgage loans, finances in multiple currencies, and leases major items like ships and planes.

In 1972, OLC established its first major subsidiary in Japan, Orient Leasing Interior Company. That same year, Orient Leasing established the Korea Development Leasing Corporation and Orient Leasing Singapore, which leases vehicles, machinery, furniture, medical and dental equipment, and vessels. In 1973, OLC entered Malaysia; in 1975, Indonesia; in 1977, the Philippines; in 1978, Thailand. OLC also established subsidiaries in South America during the 1970s, entering Brazil in 1973 and Chile in 1977.

Orient Leasing began to lease commercial aircraft in 1978, when the company purchased a DC10 from McDonnell Douglas and two Boeing 747 passenger jets for lease to Korean Air Lines. The company purchased another aircraft in the same deal for lease to Thai Airways International. This deal, part of a joint venture with Nippon Shinpan Company, came at a time when American aircraft manufacturers were complaining that limited export funding was making it difficult for them to compete internationally. According to The Wall Street Journal, the purchases were arranged in an effort to show genuine Japanese concern for reducing its trade surplus. Later in 1978, OLC purchased two wide-bodied airbuses with C. Itoh & Company for lease to Greece’s Olympic Airways.

While Orient Leasing spent the 1970s establishing itself in Asia, the 1980s were a time of expansion in the United States, Europe, and China, one still untapped Asian market. OLC brought leasing to a developing China in 1981. In partnership with two Chinese companies, China International Trust and Investment Corporation and Beijing Machinery and Equipment Corporation, OLC founded the China Orient Leasing Company. Leasing in China boomed in the following years, as state-owned enterprises demanded machinery for their outdated factories. In 1984, China Orient Leasing Company wrote $40 million in contracts, three times the amount it had written just two years earlier, for equipment as varied as plant machinery, film development equipment, and printing presses.

In 1982 Orient Leasing opened a representative office in Greece, and in 1983 the company established Orient Leasing (U.K.) in London, its first step toward an independent presence in Europe. Growth continued in 1986 with the establishment of Lombard Orient Leasing Ltd., a partnership between OLC and Lombard North Central, the largest finance company in the United Kingdom. In 1988, OLC expanded further into Europe when it made an agreement to form a leasing company in Spain to lease Japanese computers and office equipment.

In America, OLC set up Orient Leasing USA Corporation in 1981 and Orient-U.S. Leasing Corporation in 1982. In the late 1980s, OLC began to diversify, investing in the Hyatt Group, a hotel chain, and Rubloff Inc., a major Chicago real estate company.

With the Hyatt Group, OLC arranged financing for hotels in Chicago, Illinois; Greenwich, Connecticut; and Scottsdale, Arizona. Most of the equity financing came directly from OLC and Hyatt; OLC assembled Japanese investors to cover the rest.

In 1987, Orient Leasing entered the American real estate market when it bought a 23.3% interest in Rubloff. Willard Brown Jr., the chairman of Rubloff, told the Chicago Tribune, ”(Orient Leasing) has a substantial appetite, and (Rubloff’s) job will be to create the right investments for them.”

OLC entered the housing loan and mortgage security loan markets in the early 1980s. OLC also diversified into securities in 1986, surprising the leasing community with the purchase of Akane Securities Company, Ltd., a small Japanese brokerage firm. Though lease-financing is its core business, with this purchase the company announced its intention to initiate “new operations in related, high-potential fields.”

As part of its plan to diversify, Orient Leasing renamed itself Orix in 1989, the company’s 25th anniversary. According to company officials, Orix is an abbreviation of “original”, with the “X” added to symbolize a future of “flexibility and diversity.” As part of a campaign to increase recognition of its new name, Orix bought a Japanese baseball team, the Hankyu Braves, and renamed it the Orix Braves.

The leasing business has soared in Japan in the past few years, fueled by heavy capital investments by Japanese industry. It has become such an attractive business, in fact, that many new companies have entered the field, pushing profit margins below 1% even for industry-leader Orix, according to The Economist. Orix’s name change is just the most visible part of the company’s move to broaden the financial services it offers and decrease its reliance on the leasing business.

Principal Subsidiaries

Orient Auto Leasing Co., Ltd.; Orient Leasing Interior Co., Ltd. (80%); Computer Systems Leasing, Ltd. (49%); Y.O. Machinery Leasing Co., Ltd. (81%); Orient Aircraft Co., Ltd.; Osaka Ichioka Co., Ltd. (47%); Orient Instrument Rentals Co., Ltd.; Budget Rent A Car Co., Ltd. (70%); Family Consumer Credit Co., Ltd. (72%); OSR Co., Ltd. (90%); Akane Securities Co., Ltd. (95%); Orient Capital Co., Ltd. (35%); Perseus Shipping Co., Ltd.; Orient Insurance Center Co., Ltd.; Toshiki Co., Ltd. (52%); Orient Leasing (Asia) Ltd.; Orient Leasing (Hong Kong) Ltd.; Korea Development Leasing Corp. (34%); China Orient Leasing Co., Ltd. (50%); Consolidated Orient Leasing and Finance Corp. (Philippines, 40%); Thai Orient Leasing Co., Lt. (49%); United Orient Leasing Co. Bhd. (Malaysia, 45%); Orient Leasing Singapore Ltd. (50%); Orient Car Leasing Private Ltd. (Singapore, 45%); P.T. Orient Bina Usaha Leasing (Indonesia, 49%); Lanka Orient Leasing Co., Ltd. (Sri Lanka, 30%); Orient Leasing Pakistan (Private) Ltd. (40%); S.A. Locabel (Belgium, 25%); Orient Leasing (U.K.) Ltd.; Lombard Orient Leasing Ltd. (50%); Orient Leasing USA Corp.; Orient-U.S. Leasing Corp (50%); Rubloff Inc. (38%); Bradesco Leasing S.A. Arrendamento Mercantil (Brazil, 25%); Leasing Andino S.A. (Chile, 35%); Budget Orient Leasing Ltd. (Australia, 40%).