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No. 365, February 2000

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Japanese Companies in the US


FINANCIAL SERVICES

The Federal Reserve Board gave SONY CORP. and partner HELLER INTERNATIONAL CORP., a major provider of various financial services to midsize and smaller businesses, the go-ahead to form SONY FINANCIAL SERVICES LLC (see Japan-U.S. Business Report No. 357, June 1999, p. 6). Initially, the venture, in which Sony has a 51 percent stake, will offer financing to buyers of the Japanese company's consumer and industrial electronics products. Down the road, it expects to introduce financing and leasing programs for different parts of Sony's distribution channels as well as to develop consumer and third-party financing arrangements. SFS's ultimate goal is to go into the on-line financial services business through Sony's VAIO Direct Web site. Chicago- headquartered Heller is a FUJI BANK, LTD. affiliate.

The investment banking unit of the proposed MIZUHO FINANCIAL GROUP, which will be the world's largest commercial bank on formation this coming fall, will use information compiled by SANFORD C. BERNSTEIN & CO. on some 600 American companies to invest pension funds managed by the company in the stocks of U.S. firms. DAI-ICHI KANGYO FUJI TRUST & BANKING CO., LTD., set up by DAI-ICHI KANGYO BANK, LTD. and FUJI BANK, LTD., already has signed a wide-ranging agreement with the New York City institutional money manager, which is well-known for its investment research. In October 2000, this firm will merge with IBJ TRUST & BANKING CO., LTD. to become MIZUHO TRUST & BANKING CO., LTD. Mizuho Financial will result from the combination of the operations of DKB, Fuji Bank and INDUSTRIAL BANK OF JAPAN, LTD. .....At the same time, NIKKO ASSET MANAGEMENT CO., LTD. is working with SANFORD C. BERNSTEIN & CO. to develop and manage mutual funds — or investment trusts, as they are known in Japan — that invest in foreign stocks. This arrangement complements one that the money management unit of NIKKO SECURITIES CO., LTD. has with New York City's FISCHER FRANCIS TREES & WATTS INC. on foreign bond mutual funds.

Already known as one of the major Japanese investors in Internet ventures in the United States, HIKARI TSUSHIN, INC. has decided to institutionalize its information-gathering and decisionmaking processes. Its HIKARI TSUSHIN CAPITAL, INC. unit has opened an office in Redwood City, California to spearhead the search for promising investments. This operation is one of seven that Hikari Tsushin Capital is establishing overseas. The others will be in London, Hong Kong, Singapore, Taipei, Seoul and Shanghai.

Japanese institutional investors have committed $100 million to the MCC-PCG International Private Equity Fund. The fund was organized by MITSUBISHI CORPORATION CAPITAL LTD., which trader MI-TSUBISHI CORP. set up in April 1999 to expand its merchant banking and other financial services activities, and PACIFIC CORPORATE GROUP, a La Jolla, California business that specializes in making and managing private market investments (see Japan-U.S. Business Report No. 353, February 1999, p. 17). Originally, the partners had hoped to raise $50 million, but the interest of Japanese companies in diversifying their investment portfolios produced a bigger-than-expected inflow of money. DAIDO LIFE INSURANCE CO. and Mitsubishi's pension fund are the leading participants in the fund, which will take advantage of private equity investment opportunities around the world but especially in the United States and Europe.

An exchange rate of ¥105=$1.00 was used in this report.aaaaaa

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