Scandal-Hit Japan Post Looks to Revive Growth Through M&A

(Bloomberg) -- Japan Post Holdings Co. is exploring acquisitions in areas such as real estate as the former state-run company seeks to broaden revenue sources and put an insurance scandal behind it.

“We will pursue diversification of our businesses” to reduce reliance on banking and insurance, Chief Executive Officer Hiroya Masuda told a group of reporters on Monday.

He said there are “several talks” with outside parties for growth opportunities, including M&A in real estate and other operations. He declined to elaborate, saying the discussions are at an early stage.

Masuda’s remarks give the first clues on his expansion plans for Japan Post since he took the reins last month vowing to repair the image of the mail and financial services giant. The former bureaucrat-turned-politician spent the first few weeks emphasizing that his priority was to rectify improperly sold policies to customers.

Japan Post has property in prime locations that it’s been trying to turn into offices and residential assets that generate stable income. The group is also looking to acquire new properties as part of efforts to generate 33 billion yen ($300 million) in revenue from its real estate business next fiscal year.

In 2017, Japan Post considered buying Nomura Real Estate Holdings Inc. but the talks broke down.

Despite the insurance scandal, which emerged last year and prompted the Financial Services Agency to suspend some of Japan Post’s business, Masuda said the company will maintain targets set out in its current three-year business plan, which ends in March 2021.

“We would like to put various growth seeds in the next business plan and to show our growth strategy to the market,” he said.

The insurance incident has delayed the government’s plan to sell down its holding in Japan Post. The Finance Ministry had aimed to raise 4 trillion yen from the stake sales by fiscal 2022 to fund recovery from the 2011 earthquake and tsunami in Japan’s northeast.

Last year, the ministry picked underwriters for the third and final round, having secured 2.8 trillion yen from previous sales. It is now considering pushing back the deadline to fiscal 2027, people familiar with the matter said last week.

To contact the reporters on this story: Taiga Uranaka in Tokyo at turanaka@bloomberg.net;Yuki Hagiwara in Tokyo at yhagiwara1@bloomberg.net

To contact the editors responsible for this story: Marcus Wright at mwright115@bloomberg.net, Russell Ward, Katrina Nicholas

©2020 Bloomberg L.P.