ORIX details reasons for acquiring Robeco, accepting Rabobank stakes

Joining the Europe and Americas presence of Robeco and its former parent Rabobank, together with the Asia and Middle East presence of Japan’s ORIX, to accelerate future growth is one of the key reasons behind the deal announced by the companies, said Makato Inoue, ORIX president and COO, and Roderick Munsters, CEO of Robeco.

The two have spoken at a briefing on the deal, announced on 19 February, which leaves ORIX with 90.1% of Robeco, and Rabobank with a 9.99% stake in Robeco, and an equity stake in ORIX worth some €150m.

Inoue said that he saw the Dutch asset manager as a key part of the Japanese company’s global expansion plans going forward. However, it was stressed that the Robeco brand – and by implication those of its associated asset management business such as Robeco Boston Partners, Robeco Weiss Peck & Greer, Corestone Investment Management, Harbor Capital Advisors, Transtrend, RobecoSAM and Canara Robeco Asset Management Company – would remain. And Robeco’s autonomy within ORIX is further assured by Inoue’s statements that he is not looking to impose any changes to the business accounting and auditing policies.

“We won’t change any organisation, and we won’t change any auditing system. I want it to remain as it is,” Inoue said.

ORIX sees the deal as very much a strategic play to gain access to the goodwill and distribution deals already put in place, particularly in Europe, by Robeco and its former parent Rabobank.

In the bank’s home market the Netherlands, for example, the distribution relationship with Robeco will remain in place. But more importantly, Inoue explained that he saw synergies between being able to offer the asset management expertise of Robeco alongside ORIX’ own business lines in areas such as automobile maintenance and vehicle management services, ship and aircraft asset management and investments, real estate operations and real estate asset management, and in the area of environment/energy, where ORIX is active in waste disposal and recylcing as well as solar power.

For example, it is noted that Robeco’s existing commitment to solutions requiring SRI input on behalf of institutional market clients – such as Dutch pension funds – well matches the objectives that ORIX has in the environment/energy space.

Inoue added: “As you know we only have a European presence in Dublin, operating some aircraft business. Other than that we don’t have any presence in Euorpe. This is a good opportunity, having Robeco in our group and Rabobank as our partner, for expanding business in Europe. But of course, we have to study first of all what is Europe, and what is next. But, I am sure there is [opportunity] to find business or co-work with Rabobank, that’s my understanding.”

The deal takes care not to cut off Robeco from its former parent, because of the benefits seen in continuing to work with Rabobank. Partly this reflects reality on the ground: Robeco’s brand is well known in its home market and abroad, and it would not make sense to completely cut off access to the future growth potential and returns it offers to Rabobank.

Similarly, by effectively taking a strategic stake in ORIX via a €150m holding, Rabobank buys into a company with a clear objective of growing its business globally, including via acquisitions where appropriate.

Inoue said he saw the acquisition of Robeco as a “strategic investment”, and one that should end up with the asset manager becoming a “core business of ORIX group”.

“Therefore, it is not short term.”

Although Inoue and Munsters (pictured) stressed that the deal will not result in any changes visible to, say, retail clients – for example, such clients in the Netherlands can still go in to their local branch of Rabobank to acquire Robeco funds via the open architecture platform – it is also the case the previously developed business strategy will continue for the Dutch manager – including a shift in focus to institutional clients.

“I think it is difficult to say now how the 2015 plans will develop,” said Munsters about future developments as the manager sees out its current business plan through 2014.

“So far we’ve said we’ll shift a bit more weight towards the institutional part of our business. That is not to say the retail part will not grow, but the institutional part will grow fast. That’s exactly what we’ve seen. We expect more growth from our institutional part in the next few years, but we will also look for opportunities together with ORIX. Exactly what that will bring in terms of markets remains to be seen. So, for now that will be the main driver for growth, but it may change over time in future. I don’t know that yet, because we haven’t discussed that yet.”

Click here for: Japan’s ORIX acquires Robeco from Rabobank

For slides of the presentation click here: [asset_library_tag 6350,ORIX & Robeco]

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