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Privatizing DBJ

Development Bank of Japan Inc. was established on October 1, 2008. Under the terms of the Development Bank of Japan Inc. Act (Act No. 85, 2007; the ”DBJ Act”) approved by the Japanese Diet on June 6, 2007 as part of the Act on the Promotion of Administrative Reform to Bring About a Simple and Efficient Government (Act No. 47,2006; the ”Administrative Reform Promotion Act”) and the fundamental reform of policy-based finance, DBJ, upon its establishment, took over all assets of the Development Bank of Japan (the “predecessor”) as investment in kind, with the exception of assets transferred to the government under the provisions of Article 15, Paragraph 2, of the Appendix to the DBJ Act. Under Article 15, Paragraph 1, of the same act, DBJ also assumed all rights and obligations of the predecessor, with the exception of assets transferred to the government under Article 15, Paragraph 2, of the Appendix to the DBJ Act.

DBJ has instituted emergency measures to deal with the global financial and economic crisis which began in the autumn of 2008. On June 26, 2009, the Diet passed the Act for Partial Amendment of the Development Bank of Japan Inc. Act (”Revised DBJ Act”), which, by extending the government’s investment period to the end of March 2012, enables DBJ to strengthen its financial base in line with the economic crisis measures announced in April 2009.

Under the DBJ Act, DBJ was to have achieved full privatization within five to seven years after its establishment. With the act’s revision, the target date has been extended to five to seven years after the end of the investment period mentioned above. At the end of fiscal year 2011, the government plans a review of DBJ’s organization which will include the future of government-held shares. The government will continue to hold its shares until then.

On May 13, 2015, the Act for Partial Amendment of the Development Bank of Japan Inc. Act has been passed into law by the National Diet. The new Act states that in conjunction with its full privatization, and taking into consideration the current business environment in the private financial sector, DBJ, utilizing its investment and loan functions, is to take measures necessary for implementing the Crisis Response Operations and supply of growth capital-that is, DBJ is to take all possible measures to supply funds to deal with large-scale disasters, economic crises and so forth; and to promote the supply of growth capital to revitalize regional economies and to reinforce the competitiveness of enterprises. The essential measures are listed below.

(1) Crisis Response Operations

The government shall oblige DBJ to implement the Crisis Response Operations until otherwise provided for by law, and for such period may take necessary measures, including requiring the redemption of delivery bonds, in order to inject additional capital into DBJ for sufficient implementation of the Crisis Response Operations.

(2) Special Investment Operations

For special contributions to regional revitalization and reinforcement of the competitiveness of enterprises, DBJ, through the end of FY2020, shall supply capital intensively for the purpose of accelerating the supply of growth capital by private entities. DBJ shall endeavor to finish the Special Investment Operations by the end of FY2025. The government shall take necessary measures, including injection of additional capital into DBJ for sufficient implementation of the Special Investment Operations.

(3) Government-owned shares of DBJ, etc.

With a view to assuring the sufficient implementation of the necessary operations, the government shall maintain its stake in DBJ in excess of one-third for the Crisis Response Operations, and one half or more for the Special Investment Operations as long as the government shall take such measures.
Until otherwise provided for by law, the government shall oblige DBJ to take special care to ensure that its implementation of business does not obstruct proper competitive relationships with other entities. Particularly, in order to implement the Special Investment Operations properly, DBJ will increase smooth coordination with financial institutions and other entities that concern.

Face of the Privatized DBJ

Based on its corporate philosophy of "applying financial expertise to design the future," the new DBJ’s is "to build customer trust and realize an affluent society by problem-solving through creative financial activities." Based on the DBJ Act, the Bank will provide integrated investment and loan services.

Financing
Provision of medium- and long-term financing, as well as project financing and other forms of structured subordinated financing
Investing
Provision of mezzanine and equity financing
Consulting/Advisory Services
Arrangement of structured financing, provision of M&A advisory services, applying DBJ's industry research function and expertise in environmental and technical evaluations

FAQ

What is DBJ's corporate philosophy?
Occasioned by privatization, DBJ has created the new corporate philosophy of "Applying financial expertise to design the future" and established new goals. This philosophy expresses our conviction that creative financing is the key to solving problems, building the trust of our clients and achieving future prosperity.
While retaining the identity that DBJ has built for itself, this corporate philosophy clearly outlines the qualities that we will develop as a private-sector company. Our enthusiasm for the new vistas that will open to us as a private-sector company is inherent in the phrase "design the future."
Can you be more specific about DBJ's business model?
Upon privatization, DBJ aims to operate on the business model of a highly specialized financial institution that provides integrated investment and loan services.
In the past, long-term lending operations have been the core of DBJ's business. In response to the increasingly diverse customer needs that have arisen in recent years, we plan to increase our involvement in business that takes advantage of our screening expertise on long-term projects, as well as structured financing and fund investment. We will continue to enhance our investment and financing functions, providing a wide range of services that contain facets of both.
In addition to providing new M&A advisory services, consulting and other information services, we intend to mold ourselves into a financial institution that provides specific value to its customers.
Tell us about your community initiatives.
Along with the environment and technology, DBJ positions community initiatives as one of its three pillars of business. After privatization as well, we will respond to the business succession needs of medium-sized local companies, conduct M&A activities employing our networks that cover a broad range of key industries, and respond to customer needs through business revitalization initiatives that leverage our relationships with local financial institutions.
Will the new DBJ conduct business overseas?
Given that many of our customers have global operations, we believe that taking a multifaceted approach to their needs will make overseas business an inevitable development for us. As we are not legally restricted from conducting business overseas, we consider international business within our scope.
Please describe your future fund-raising efforts.
We will develop a medium- to long-term fund-raising platform concentrating on corporate bonds. We will round out these efforts with diverse methods to raise funds in a stable and efficient manner, such as by borrowing from other financial institutions.

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