Business Context and Reporting Period
This Form 6-K filing by Mizuho Financial Group, Inc. (Mizuho) dated February 26, 2019, announces a strategic capital and business alliance between its consolidated subsidiary, Mizuho Bank, Ltd., and IBJ Leasing Company, Limited (IBJ Leasing). The agreement aims to strengthen lease finance operations, expand gross profits in sectors such as healthcare and energy, and create a "next-generation financial platform."
Key Financial Metrics
The filing does not provide Mizuho Financial Group's consolidated revenue, profit, or cash flow for the current reporting period. It provides historical consolidated data for the target company, IBJ Leasing, and the subsidiary, Mizuho Bank, for fiscal years ending March 2016 through March 2018.
| Entity | Metric | FY March 2016 | FY March 2017 | FY March 2018 |
|---|---|---|---|---|
| IBJ Leasing | Total Assets (million yen) | 1,718,720 | 1,752,284 | 1,821,501 |
| Sales (million yen) | 364,174 | 429,405 | 399,738 | |
| Ordinary Profit (million yen) | 18,570 | 18,789 | 19,964 | |
| Net Profit (million yen) | 11,609 | 12,414 | 13,643 | |
| Mizuho Bank | Total Assets (million yen) | 161,697,891 | 170,400,577 | 171,298,240 |
| Operating Profit (million yen) | 2,481,377 | 2,580,331 | 2,862,291 | |
| Ordinary Profit (million yen) | 834,004 | 583,565 | 647,076 | |
| Net Profit (million yen) | 559,798 | 408,511 | 485,102 |
Material Changes and Transaction Details
Mizuho Bank has entered into a Capital and Business Alliance Agreement with IBJ Leasing. The transaction involves two components:
- Capital Increase: Mizuho Bank will subscribe for 6,355,000 new shares of IBJ Leasing (13.0% of post-increase total) via third-party allotment.
- Share Transfer: Mizuho Bank will acquire 2,654,200 existing shares (5.4% of post-increase total) from current shareholders via off-market negotiated transactions.
Upon completion, Mizuho Financial Group will hold a total of 22.2% of IBJ Leasing's common stock, making IBJ Leasing an equity-method affiliate. IBJ Leasing plans to change its trade name to "Mizuho Leasing" pending shareholder approval in June 2019.
Outlook, Risks, and Management Commentary
Management Commentary: The alliance is designed to leverage Mizuho Bank's extensive corporate client base and global network with IBJ Leasing's asset valuation and management capabilities. The goal is to drive sustainable growth in the Japanese economy and enhance corporate value for both entities.
Financial Impact: Management states that the effects of this alliance on the business results for the current fiscal year for both Mizuho Financial Group and IBJ Leasing are expected to be minor.
Risks and Contingencies: The implementation of the capital increase and share transfers is subject to obtaining necessary permissions and approvals from relevant competition authorities. The planned implementation date for these transactions is March 29, 2019.
Key Facts for Investor Verification
- Verify the final shareholding percentage of Mizuho Financial Group in IBJ Leasing (targeted at 22.2%) once the transaction closes.
- Confirm receipt of regulatory approvals from competition authorities required for the transaction to proceed by the planned March 29, 2019 date.
- Monitor the rebranding of IBJ Leasing to "Mizuho Leasing" and the appointment of a Mizuho-nominated outside director.
- Review future disclosures for any material financial impacts if the alliance yields results exceeding the current "minor" impact assessment.