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Noriyuki Morimoto's Blog

Japanese casino legalization and finance

Oct 22, 2018
byNoriyuki Morimoto

It looks like casinos are finally becoming legal in Japan. Casino legalization is a controversial issue with strong arguments on both sides. Supporters argue that developing integrated resort (IR) facilities including casinos would become one of the pillars in Japan’s growth strategy, as it will generate large consumption demand, particularly by increasing inbound visitors. On the other hand, opponents point to social problems such as gambling addiction. Gambling can cause outcomes that run against customers’ benefits, such as addiction and loss of huge amounts of money. Therefore, it is a crime. But even when the act is a crime, if there is a social benefit like financing local governments through public gambling, special laws can be made to decriminalize the act. With the same reasoning, casino legalization is being discussed. The assumption in legalization of gambling is that it produces remarkably high customer satisfaction. That is the source of strong demand, and supporters are attempting to realize social benefits by using that demand. Similar things can be said for tobacco and liquor: considering their health impacts, we cannot deny their aspect of running against customers' real gains, but there exists a very strong demand based on customer satisfaction. Therefore, they can sell even when high tax rates are imposed, which in turn creates a stream of tax revenue. In addition, it is extremely difficult to distinguish between fraud and fraud-like activities. For example, if you believe that a duvet is being sold at a price significantly exceeding its real value, even if you suspect it to be a fraud, there is nothing to be done if the person who purchased it believes the product is high quality because it is expensive. Such shady schemes also work based on their creation of high customer satisfaction. Also, in areas that support modern consumption, such as fashion, food and drinks, entertainment, and so forth, customer satisfaction is formed at a level that far exceeds their critical functions and bare necessities of clothing, shelter and living. Put bluntly, the pathology of wasteful overconsumption has become a driving force for economic growth. However, there are also established areas in this ailing modern society where it is crucial to consider the customers’ true benefit based on necessity, even against customer satisfaction. These are regulated industries including medicine, education, and finance.

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Recent News

Private Equity in Japan: INCJ to make follow-on investment in QUADRAC Co., Ltd. A startup company developing IT payment platforms

Oct 19, 2018
byInvestment in Japan

Private Equity in Japan>INCJ's announcementTokyo, October 18, 2018 – INCJ, Ltd. (“INCJ”) announced today its decision to make a follow-on investment of up to JPY1 billion in QUADRAC Co., Ltd. (“QUADRAC”), an IT payment platform venture, and the completion of JPY600 million as the milestone investment for their new business development.

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Private Equity in Japan: INCJ to sell its shares in Exvision Inc.

Oct 18, 2018
byInvestment in Japan

Private Equity in Japan>INCJ's announcementTokyo, October 17, 2018 — INCJ, Ltd. (“INCJ”) announced today that it has agreed to sell all its shares in Exvision Inc. (“Exvision”) to Nikon-SBI Innovation Fund.

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J-REIT:MIRAI Corporation's announcement

Oct 17, 2018
byInvestment in Japan

J-REIT>MIRAI Corporation's announcement①MIRAI Corporation (hereinafter “MIRAI”) announces that a resolution was passed at a meeting of its Board of Directors held on October 16, 2018 to issue new investment units and conduct the secondary offering of investment units. >MIRAI Corporation's announcement②Mitsui Bussan & IDERA Partners Co., Ltd. (hereinafter the “Asset Manager”), the asset management company of MIRAI Corporation (hereinafter “MIRAI”) announces that MIRAI has decided to make the acquisition (hereinafter “Acquisition”) and the start the lease of assets. 

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Today's Pick

Oct 17, 2018
byAkane Hashimoto

Reflecting the nation’s history, sōgō shōsha are unique to Japan"Easy to read article on Japan conglomerates or trading companies."Japan has world's most powerful passport, report finds; USA's is bumped to fifth"Japan now has access — either visa-free or visa-upon-arrival — to 190 countries, just narrowly beating out Singapore (189)" Governance/Stewardship/FiduciaryAsia’s progress on ESG is glacially slow but attitudes are changing

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Private Equity in Japan: INCJ to make follow-on investment in JTOWER Inc. A company that provides telecommunications infrastructure sharing solutions

Oct 12, 2018
byInvestment in Japan

Private Equity in Japan>INCJ's announcementTokyo, October 11, 2018-INCJ, Ltd.("INCJ") announced today its decision to make a follow-on investment of up to JPY 4 billion in JTOWER Inc. ("JTOWER"). This investment decision was made in light of JTOWER's business progress, and the additional funding is to be used as growth capital for JTOWER's new outdoor telecommunications infrastructure sharing business.

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Private Equity in Japan: INCJ to make follow-on investment in Oscar Technology Corporation A venture company providing software parallelization technology

Oct 11, 2018
byInvestment in Japan

Private Equity in Japan>INCJ's announcementTokyo, October 10, 2018— INCJ, Ltd. (INCJ) announced today its decision to make a follow-on investment  of  up  to  JPY 600  million  in  growth  capital  in  Oscar  Technology Corporation (Oscar Technology), a provider of software parallelization technology, and the completion of JPY 200 million of this investment through a third-party allocation of shares. New  investors  in  this  round  of  financing  include Mirai  Creation  Fund  and  Sansei  Capital Investment Co., Ltd..

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Today's Pick

Oct 10, 2018
byAkane Hashimoto

MUFG's Nobuyuki Hirano: Japanese banking's greatest hope"This article describes business challenges and new targets of Japanese mega banks."Saudi Arabia Doubles Down on SoftBank Bet With Extra $45 Billion"The Vision Fund seems to have  made a return of over 20 percent in its first five months."Tsukiji: Japan's famed fish market to relocate"Relocating to Toyosu, opening on October 11." Recent NewsBusinessToyota and Softbank form Monet mobility company, plan autonomous services Policy(BOJ)Abenomics Revamp Needed to Sustain Japan Recovery, IMF Says

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J-REIT: Notice Concerning Issuance of Investment Corporation Bond (Advance Residence Investment Corporation)

Oct 09, 2018
byInvestment in Japan

J-REIT>Advance Residence Investment's announcementAdvance Residence Investment Corporation (ADR) announced today its decision to issue an investment corporation bond as follows, based on the general resolution on ADR bond issuance adopted at the Board of Directors’ Meeting held on July 26, 2018.

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Noriyuki Morimoto's Blog

The crisis of Japan's financial industry without risk taking

Oct 09, 2018
byNoriyuki Morimoto

In finance, risk taking is easily confused with risk management. Looking at the actual business of financial institutions, the risks they take are within the scope set by regulations as banking businesses, to the extent that such risks can be taken - rather than should be taken - under such regulations, in a passive, or - by a stronger expression - unaware manner, often merely as an extension from the past. Finance is also a business, and as common business sense, financial institutions should have to determine the unique differentiated scope of their business, identify priority customers, and take the risks that should be taken to create value from the customer's point of view. Such risks have to be strictly defined, and risk-taking must be carried out with awareness. The confusion between risk-taking and risk management is particularly noticeable in Japan. It may be a result of the fact that full-scale financial regulation reform was late to be implemented. Unfortunately, there are no financial institutions that conduct risk-taking with full awareness. However, the Japanese financial industry is now at its ultimate crisis. Moreover, the crisis was not caused by external factors such as negative interest rates. As a result of fruitless interest rate competition, sales of investment trusts and insurance diverged from the customer's point of view, and cost reduction without strategy, their capability of fundamental risk-taking declined consistently. When the results materialized, it had just been a matter of time, although the external environment did certainly accelerate the crisis. Therefore, in recent years, the Financial Services Agency has been strongly demanding financial institutions to take risks with awareness. Certainly, the FSA’ sense of urgency should have been deeply and quietly penetrating the financial world, but on the surface, it seems that the financial industry is hardly aware of this crisis. It’s not easy to provide an answer on how to get out of the crisis. Because it is not easy, financial institutions have not been able to take concrete actions, and look like they have no idea of what should be done. That is the current state of Japanese finance.

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J-REIT: Notice Concerning Issuance of Investment Corporation Bonds-Invincible Investment Corporation

Oct 05, 2018
byInvestment in Japan

J-REIT>Invincible's announcementInvincible Investment Corporation ("INV") hereby announces its decision to issue its investment corporation bonds (the "Issuance") today.

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Private Equity in Japan: CLSA Capital Partners'announcement

Oct 04, 2018
byInvestment in Japan

Private Equity in Japan>CLSA Capital Partners' announcement①Tokyo – Wednesday, 3 October, 2018 – CLSA Capital Partners, the asset management business of CLSA, is pleased to announce that Sunrise Capital III’s (“Sunrise III”) portfolio company, KK AB & Company (“AB & Company”), has agreed to acquire 100% of the shares of Kalo Co., Ltd. (“Kalo”). Sunrise III is a CLSA Capital Partners fund that invests in established, mid-cap companies with strong growth potential in Japan. >CLSA Capital Partners' announcement②Tokyo – Wednesday, 3 October, 2018 – CLSA Capital Partners, the asset management business of CLSA, is pleased to announce that Sunrise Capital III’s (“Sunrise III”) portfolio company, KK AB & Company (“AB & Company”), has agreed to acquire 100% of the shares of Agir Co., Ltd. (“Agir”). Sunrise III is a CLSA Capital Partners fund that invests in established, mid-cap companies with strong growth potential in Japan.

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