bank of america merrill lynch2016 japan conference … · ppp/pfi, including concession pfi, is one...

Copyright © 2016 ORIX Corporation All rights reserved.

ORIX CorporationShuji Irie

Corporate Senior Vice President

Head of Investment and Operation Headquarters

Responsible for Concession Business Development Department

September 15, 2016

(TSE: 8591; NYSE: IX)

ORIX’s Concession BusinessBank of America Merrill Lynch2016 Japan Conference


Table of Contents

1. Concession Business

2. About the Kansai Airports Project (KAP)

3. Post-KAP Strategy

Appendix

1


1. Concession Business

2


Positioning of Concession PFI among other PPP

Type IVUtilize existing public real estate business

PPP(Public Private Partnership)Utilize private sector’s creativity and improve administrative

efficiency through public private partnership in the construction, maintenance, and operation of public facilities

Type IPFI business under the “Right to Operate

Public Facility etc.” system（Concession PFI）

Type IIRevenue generating business（Expansion or operation of existing

revenue-generating facilities to collect initial investment outlay）

Type IIIOther PPP/PFI business

①Service sold to public sector②Comprehensive BPO

PFI(Private Finance Initiative)A method, based on the PFI Act, of utilizing financing,

management/operation, and technical capability from the private sector in the construction, maintenance, and operation of public

facilities.

Source: Action Plan 2016.5 (Cabinet Office, Government of Japan)

Overview of PPP/PFI

3


PFI until 2012 vs. Current PFI

PFI until 2012 Current PFI

¥4.1 tn/418 projects between FY1999-2012

ScaleTargeting ¥21 tn for the 10 years

between FY2013-2023

Central government/Municipality determines project plan

Planning BodyBusiness proposal initiated by private

sector is possible

Mostly educational facilities, government buildings,

accommodation facilities for government workers

Subject Including infrastructure assets

80% were “services sold to the public sector”

PPP SchemeImplementation of the concession PFI, expansion of financially free-standing

projects

Reliant on creditability of government body

Funding SchemeInvestors can take part of the risk

depending on the project

4


Recent History and Background of Concession PFI

2011 Revision of PFI

Act

2013 New PFI Target

2015 MayTarget Schedule

Accelerated

2016 MayNew Target

As a measure to revamp public infrastructures, to further utilize capital in the private sector, the concession method was made possible in the revised PFI Act

Target to implement PPP/PFI projects totaling ¥12 tn (of which ¥2-3 tn are concession PFI) was stated in the Japan Revitalization Strategy for the 10 year period up to 2022

October, established PFI promotion office

In a joint meeting of Council on Economic and Fiscal Policy Council and Industrial Competitiveness Council, it was resolved to accelerate the implementation of PFI projects over a three-year intensive implementation period running to the end of FY2017)

A number of projects under key focus area were stated: 6 airports, 6 water systems, 6 sewerages, 1 toll road

3 educational facilities and 6 public housing facilities were added in the focus area

Ten year target increased from ¥10-12 tn to ¥21 tn（of which, Concession ¥7 tn, Revenue generating business ¥5 tn, Utilize

existing public real estate ¥4 tn, Other PFI projects ¥5 tn）

5


２. About the Kansai Airports Project (KAP)

6


Overview

Consistent with its commitment to serving as a familiar, dynamic urban airport, ITM provides travelers with valuable experiences imbued with convenience and hospitality.

KIX continues to work around the clock with enthusiasm to handle the endless flow of people and goods to earn the trust, affection and respect of our customers and contribute to the development of the Japanese economy and society.

7


Potential of KIX/ITM and Kansai

ORIX and Vinci Airports believe in the potential of these airports, and in the region

8


Consideration for operating

right

Japanese Government

Return performance

guarantee deposit

Investment and finance

Dividends, interests

Railway(NKIAC)

KIALC

66.5%

Operating rights->Concessionaire

FacilitiesItami

(Land& Facilities)

transfer to

Concessionaire

Subsidiaries’ share,

Movables

NKIAC

Repayment

Finance

Land

100%Other

ShareholdersORIX VINCI Airports

（Consortium）

Operation area

<Structure>

Term: April 1 , 2016 - March 31, 2060 (44 years)

NKIAC ・KIALC (owner of land) continue to own land and facilities and grant operating right to concessionaire

Engage in the operation of both Aviation and non-aviation related business

The aviation control business, customs , immigration control and quarantine business and railway business are outside the scope of the business of the Concessionaire.

Lender

Kansai Airports

9

Overview of Structure


The Best Team for the Future

• Know-how and experience in finance and real estate business

• Kansai origins, footprint, solid business network

• Strong Commitment to the region

• Entrepreneurial spirit

• Agile, flexible business style

• Similar mindset to VINCI Airports

• Brings demonstrated airport operation expertise

• International network

• Committed to the region

• Entrepreneurial spirit

• Agile, flexible business style

• Similar mindset to ORIX

10


Action Towards becoming ASIA’s leading airport

Traffic and revenue targets

11


3. Post-KAP Strategy

12


Major Concession PFI Projects and Candidates

Kushiro airportObihiro airport

Asahikawa airportWakkanai airport

New Chitose airport

Aomori airport

Hakodate airport

Sendai airport (Concessionaire: Tokyu consortium）

(No. of passengers in 2015: 3.15 mn）

Shizuoka airport

Sewage(Hamamatsu)

Aichi prefecture toll road（Maeda consortium granted with

preferred negotiation right）Concession starts: October 2016

Water supply/sewage (Otsu)

Tajima airport

Water supply/sewage (Osaka)

Kansai airports

（Concessionaire: ORIX consortium）（Osaka Int. Airport: 14.54 mn passengers in 2015)（Kansai Int. Airport: 23.21 mn passengers in 2015)

Takamatsu airport

Hiroshima airport

Fukuoka airport

AirportsAnnual Passengers in

mn (2015)Concession

StartsCurrent Status

Takamatsu 1.81 April 2018 Implementation policy announced in July, and application guideline for bidders announced in September

Kobe 2.45 Spring 2018Implementation policy and application guideline for bidders to be announced in September and October 2016 respectively

Fukuoka 20.97 April 2019 Implementation policy to be announced between March and April 2017

Hiroshima 2.67 (2019)Hiroshima Airport Revitalization Meetings, which started in December 2015, have been discussing on the topic of utilizing concession PFI

New Chitose（incl. 7 airports in Hokkaido)

20.46（25.62）

April 2020Implementation policy to be announced in summer 2018. The concession is expected to include all 7 airports in Hokkaido (New Chitose, Kushiro, Wakanai, Hakodate, Asahikawa, Obihiro, Memanbetsu)

Memanbetsu airport

Nanki Shirahama airport

・・・Projects where bidding processhas finished

13

Kobe airport


Other Candidate Projects in the Concession PFI Market

Airport Toll Road Water System/Sewage Educational Facility

Market Scale

Op. Revenues ¥450.6 bnOp. Profits ¥10.3bn

*FY2014 figures*Aggregate of 27 airports operated by the government

Op. Revenues ¥238.3 bnEBITDA ¥135.7 bn

*FY2014 figures*Aggregate of 33 regional toll road companies

Op. Revenues ¥4,281.3 bnNet Income ¥315.2 bn

*FY2014 figures*Aggregate of public water systemoperators including 1348 water suppliers, 749 simple water suppliers, and 591 sewage operators

Museum（and quasi-ones）

4,246Public sports facility

27,469Cultural hall 1,742Others 20,347

Schedule

FY2016Bidding to start (Takamatsu)

After FY2017(Kobe, New Chitose, Fukuoka, Hiroshima, and others)

FY2016Bidding to start (Aichi)

FY2016Bidding to start (Hamamatsu/Sewage)

FY2016Discussion points to be reviewed by Ministry of education, culture, sports, science, and technology.

Main CF factorsAir transportation demand, commercial facilities

Major highway demand/development

Regional demand (correlates with population)

Regional demand

Potential Commercial Upside

◎ △ ×○

（facility type dependent）

Main RisksRegional/national economic

condition, FX, plague, political risks..etc

Regional economic condition and competition from other transportation alternatives

Shrinking populationRegional economic

condition

Project Sponsors (Presumption)

Trading companies, railway companies, regional business

circles, real estate developers…etc.

Railway companies, Construction

companies/consultants

Water engineering companies, trading companies, municipalities

Sports/Leisure related companies, house builders

Note: Ports are also potential concession PFI candidates

14


1964 2016

Leasing

Lending

Life Insurance

Banking

Servicer

Automobiles

Ships/Aircraft

Investment

Investment Banking

Asset Management

Concession BusinessReal Estate

Environment/Energy

2014 Real Estate Business Division appointed a team to study about the Concession Business

2015 Concession Business Development Department was established

ORIX’s Concession Business Important Position in the Group

ORIX leverages its operational know-how to evolve, diversify and adapt its portfolio to take advantage of changing macroeconomic conditions

Leas

ing

15

Credit

Screening and Finance Capability

Expertise in Handling Tangible Assets


ORIX’s Concession Business Future Outlook

PPP/PFI, including concession PFI, is one of the important policies under the government’s current effort in its Integrated Economic and Fiscal Reforms

ORIX Group intends to take an proactive part in the concession PFI and other various PPP/PFI opportunities

Kansai/Osaka Airports

Secure multiple airport operations

Non-airport projects

Projects abroad

Solidify Business Platform

Group-wide cooperation(ORIX business units including

Real estate, Investment and

Operation, and Environment

and Energy)

For fields that require specialized technical

expertise, we accumulate internal know-

how through alliance with other firms, and

strengthen our own capability

Secure track records in Japan, accumulate business know-how/expertise, and strengthen human capital

Overseas expansion upon accumulation of domestic track records

Partner

16


Appendix

17


ORIX has maintained profitability for the past 51 consecutive years

Net Income Attributable to ORIX Corporation Shareholders

FY2002.3Bursting of the IT

Bubble

FY2009.3Collapse of Lehman

Brothers

FY1998.3

FY1993.3

Bursting of the Economic Bubble

Asian Financial Crisis

FY2016.3

Record Net Income

About ORIX Proven Track Record of Profitability

0

50

100

150

200

250

300

1975 1980 1985 1990 1995 2000 2005 2010 20151964

JPY Bn

18


Segment AssetsApprox. 8.6Tn yen

（As of 2016.6.30)

Lending, Leasing, fee businesses

Automobile leasing and rentals,Car sharing, Test and measurement instruments and IT-related equipment rentals and leasing

Real estate development/rental/ facility operation, REIT asset management, and real estate investment and advisory services

Leasing, Lending, Investment in bonds, Asset management, Ship/Aircraft-related operations

Life insurance, Banking, Card loan business

Environment and energy-related business, Principal investment and Loan servicing (asset recovery),Concession business

Our highly diversified company contains many complementary businesses, providing ample opportunity for synergies and knowledge sharing

About ORIX Assets by Segment

Overseas Business

Retail

Corporate Financial Services

Maintenance Leasing

Real Estate

Investment and Operation

12%

8%

8%

8%

40%

24%

19


These materials have been prepared by ORIX Corporation (“ORIX” or the “Company”) solely for your information and are subject to change without notice. The information contained in these materials has not been independently verified and its accuracy is not guaranteed. No representations, warranties or undertakings, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness, or completeness, or correctness of the information or the opinions presented or contained in these materials.

These materials contain forward-looking statements that reflect the Company’s intent, belief and current expectations about future events and financial results. These statements can be recognized by the use of words such as “expects,” “plans,” “will,” “estimates,” “projects,” “intends,” or words of similar meaning. These forward-looking statements are not guarantees of future performance. They are based on a number of assumptions about the Company’s operations and are subject to risks, uncertainties and other factors beyond the Company’s control. Accordingly, actual results may differ materially from these forward-looking statements. Factors that could cause such differences include, but are not limited to, those described under “Risk Factors” in the Company’s most recent annual report on Form 20-F filed with the U.S. Securities and Exchange Commission and under “Business Risk” of the securities report (yukashouken houkokusho) filed with the Director of the Kanto Local Finance Bureau.

Some of the financial information in these materials is unaudited.

The Company believes that it will be considered a “passive foreign investment company” for United States Federal income tax purpose in the year to which these consolidated financial results relate and for the foreseeable future by reason of the composition of its assets and the nature of its income. A U.S. holder of the shares or ADSs of the Company is therefore subject to special rules generally intended to eliminate any benefits from the deferral of U.S. Federal income tax that a holder could derive from investing in a foreign corporation that does not distribute all of its earnings on a current basis. Investors should consult their tax advisors with respect to such rules, which are summarized in the Company’s annual report.

Nothing in this document shall be considered as an offer to sell or solicitation of an offer to buy any security, commodity or other instrument, including securities issued by the Company or any affiliate thereof.

Disclaimer

20


For annual and more historical data please access our website. A list of major disclosure materials is given below.

ORIX Websitehttp://www.orix.co.jp/grp/en/

IR Websitehttp://www.orix.co.jp/grp/en/ir/

ORIX Corporation Corporate Planning DepartmentWorld Trade Center Building., 2-4-1, Hamamatsu-cho, Minato-ku, Tokyo 105-6135, Japan

Tel: +81-3-3435-3121 Fax: [email protected]

bank of america merrill lynch2016 japan conference … · ppp/pfi, including concession pfi, is one...

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