(E10936) Stock Price

Mercurial Investment is an investment management company with approximately 180 billion yen in assets under management. Its core business consists of fund management operations, where it manages funds raised from domestic and international institutional investors, and proprietary investment operations using its own capital. The company specializes in "cross-border" investments, focusing on investment opportunities that transcend national and regional boundaries, as well as challenging ventures that go beyond conventional business frameworks.

The company's revenue structure is built on two pillars: management fees for fund administration and performance fees based on investment returns. In the fiscal year ended December 2020, management fees totaled 1.75 billion yen and performance fees reached 560 million yen, with performance fees fluctuating according to distributions to investors. The company's clients are primarily institutional investors such as pension funds and insurance companies, from which it raises capital and manages investments through funds such as investment partnerships.

The business is divided into five investment strategies. Real estate investment and cash flow investment strategies are the largest, accounting for approximately 90% of assets under management. The growth investment strategy focuses on business investments that combine new technologies with existing industries. The buyout investment strategy promotes management reforms through corporate acquisitions. The value investment strategy invests in assets trading below their theoretical value. The company also demonstrates strong capabilities in real estate investment across Asia, with experience managing Spring REIT, a real estate investment trust listed on the Hong Kong Stock Exchange.

Mercuria Investment has set clear numerical targets for its five-year growth strategy. The company aims to achieve average net income of 2 billion yen or more over five years and increase shareholders' equity to 1.5 times the level as of December 2018. This represents approximately double the five-year average of 1.1 billion yen from the fiscal year ended December 2020. To achieve these targets, the company plans to expand revenue through two pillars: maximizing success fees from its core funds and strengthening management fees through the formation of new funds.

The company's priority investment areas focus on diverse investment strategies centered on the "cross-border" concept. Specifically, it pursues five strategies: growth investment, value investment, buyout and succession investment, real estate investment, and cash flow investment. Key initiatives include buyout funds developed in partnership with Japan Policy Finance Bank and Sumitomo Mitsui Trust Bank, real estate and logistics technology investments through collaboration with Itochu Corporation, and renewable energy investments. In these investment areas, the company's competitive advantage lies in creating unique investment opportunities by leveraging strong relationships with existing industry partners.

In developing new markets, the company views structural industry changes caused by COVID-19 and the Tokyo Stock Exchange's market segment reorganization as business opportunities. The company is building an agile management structure capable of rapid and flexible decision-making, while considering enhanced partnerships with business partners and corporate restructuring through M&A. The company has already built international track records, including Spring REIT listed on the Hong Kong Stock Exchange and Enex Infrastructure Investment Corporation listed on the Tokyo Stock Exchange Infrastructure Fund Market. Based on these experiences, the company plans further geographic expansion.

Regarding technological innovation, the company focuses on supporting growth through technology adoption in real estate and logistics via the "Mercuria Biztech Investment Limited Partnership," jointly formed with Itochu Corporation. The company emphasizes value creation through the convergence of new technologies and existing industries, moving beyond traditional financial investment. To capture investment opportunities across digitally transforming industries, the company is simultaneously strengthening its management systems and developing talent.