TOKYO -- Hitachi and Mitsubishi UFJ Financial Group will form a capital and business tie-up in the field of leasing, creating the second-biggest player domestically and boosting their global competitiveness.
The deal, to be announced Friday, will see Hitachi sell a stake of almost 30% in Hitachi Capital to MUFG and Mitsubishi UFJ Lease & Finance by September, a transaction estimated to be worth more than 100 billion yen ($921 million). Later, the Hitachi group leasing company will take an interest of no more than 5% in its Mitsubishi group counterpart.
Hitachi also aims to tap MUFG's project financing capability. The setup will help to provide more complete packages -- from financial services to equipment installation and maintenance -- for customers of its infrastructure business, which handles areas such as power generation facilities and information technology systems.
Aiding customers in accessing project financing will help Hitachi win big infrastructure-related orders around the globe. As more businesses turn to leasing in pursuit of maximum capital efficiency, Hitachi anticipates leasing demand to increase for its wide range of equipment. Introducing MUFG to customers for business loans also will help Hitachi in this arena.
The tie-up will help MUFG expand its leasing business, which has grown into a major revenue generator. The leasing business is expected to grow even more important for the mega-financial institution, as its mainstay banking business likely will be hurt by the Bank of Japan's negative interest policy.
The Hitachi group holds a roughly 60% stake in Hitachi Capital, which handles leasing of Hitachi products such as IT equipment. With a total asset value of 2.74 trillion yen as of the end of March 2015, the leasing unit ranked fifth in the domestic industry.
Mitsubishi UFJ Lease, positioned third, held more than 5 trillion yen in assets. MUFG's subsidiaries also include BOT Lease.
The combined asset value of 7.78 trillion yen or so between Hitachi Capital and Mitsubishi UFJ Lease will put the partnership behind the top-ranked Orix's roughly 11 trillion yen and ahead of current No. 2 Sumitomo Mitsui Finance and Leasing. In the future, Hitachi and MUFG may consider merging the leasing units.