ORIX's Concession Business

Home , Aomori Airport, Asahikawa Airport, Concession (contract), Hiroshima Airport, Kushiro Airport, Memanbetsu Airport

Bank of America Merrill Lynch2016 Japan Conference ORIX’s Concession Business

ORIX Corporation Shuji Irie Corporate Senior Vice President Head of Investment and Operation Headquarters Responsible for Concession Business Development Department

1. Concession Business

2. About the Kansai Airports Project (KAP)

3. Post-KAP Strategy

Appendix

Overview of PPP/PFI PPP(Public Private Partnership) Utilize private sector’s creativity and improve administrative efficiency through public private partnership in the construction, maintenance, and operation of public facilities PFI(Private Finance Initiative) A method, based on the PFI Act, of utilizing financing, management/operation, and technical capability from the private sector in the construction, maintenance, and operation of public facilities. Type I PFI business under the “Right to Operate Public Facility etc.” system （Concession PFI）

Type II Type III Revenue generating business Other PPP/PFI business （Expansion or operation of existing ①Service sold to public sector revenue-generating facilities to collect ②Comprehensive BPO initial investment outlay）

Type IV Utilize existing public real estate business

Source: Action Plan 2016.5 (Cabinet Office, Government of Japan)

PFI until 2012 Current PFI

¥4.1 tn/418 projects between Targeting ¥21 tn for the 10 years Scale FY1999-2012 between FY2013-2023

Central government/Municipality Business proposal initiated by private Planning Body determines project plan sector is possible

Mostly educational facilities, government buildings, Subject Including infrastructure assets accommodation facilities for government workers Implementation of the concession PFI, 80% were “services sold to the public PPP Scheme expansion of financially free-standing sector” projects

Reliant on creditability of Investors can take part of the risk Funding Scheme government body depending on the project

2011 Revision of PFI  As a measure to revamp public infrastructures, to further utilize capital in the private sector, the concession method was made Act possible in the revised PFI Act

 Target to implement PPP/PFI projects totaling ¥12 tn (of which ¥2- 2013 New PFI Target 3 tn are concession PFI) was stated in the Japan Revitalization Strategy for the 10 year period up to 2022  October, established PFI promotion office

 In a joint meeting of Council on Economic and Fiscal Policy Council and 2015 May Industrial Competitiveness Council, it was resolved to accelerate the Target Schedule implementation of PFI projects over a three-year intensive implementation period running to the end of FY2017) Accelerated  A number of projects under key focus area were stated: 6 airports, 6 water systems, 6 sewerages, 1 toll road

 3 educational facilities and 6 public housing facilities were added in the 2016 May focus area New Target  Ten year target increased from ¥10-12 tn to ¥21 tn （of which, Concession ¥7 tn, Revenue generating business ¥5 tn, Utilize existing public real estate ¥4 tn, Other PFI projects ¥5 tn）

Consistent with its commitment to KIX continues to work around the clock with serving as a familiar, dynamic urban enthusiasm to handle the endless flow of airport, ITM provides travelers with people and goods to earn the trust, valuable experiences imbued with affection and respect of our customers and convenience and hospitality. contribute to the development of the Japanese economy and society.

 ORIX and Vinci Airports believe in the potential of these airports, and in the region

（Consortium） Japanese Government Other ORIX VINCI Airports Shareholders 66.5% 100% KIALC NKIAC Consideration for operating Dividends, right interests Investment and finance

Land Subsidiaries’ Itami Return share, Facilities (Land& performance Kansai Movables Facilities) guarantee Airports deposit transfer to Finance Concessionaire Operating rights->Concessionaire Repayment Operation area Lender

Railway(NKIAC)

 Term: April 1 , 2016 - March 31, 2060 (44 years)  NKIAC ・KIALC (owner of land) continue to own land and facilities and grant operating right to concessionaire  Engage in the operation of both Aviation and non-aviation related business  The aviation control business, customs , immigration control and quarantine business and railway business are outside the scope of the business of the Concessionaire.

• Know-how and experience in • Brings demonstrated airport finance and real estate business operation expertise • Kansai origins, footprint, solid • International network business network • Committed to the region • Strong Commitment to the region • Entrepreneurial spirit • Entrepreneurial spirit • Agile, flexible business style • Agile, flexible business style • Similar mindset to ORIX • Similar mindset to VINCI Airports

 Traffic and revenue targets

Wakkanai airport Kansai airports Asahikawa airport New Chitose airport （Concessionaire: ORIX consortium）（ Memanbetsu airport Osaka Int. Airport: 14.54 mn passengers in 2015) Hakodate airport （Kansai Int. Airport: 23.21 mn passengers in 2015) Water supply/sewage (Otsu) Kushiro airport Aomori airport Obihiro airport Sendai airport ・・・Projects where bidding process Tajima airport (Concessionaire: Tokyu consortium） has finished (No. of passengers in 2015: 3.15 mn） Kobe airport Aichi prefecture toll road Hiroshima airport （Maeda consortium granted with preferred negotiation right） Fukuoka airport Concession starts: October 2016 Shizuoka airport Sewage(Hamamatsu) Takamatsu airport Water supply/sewage (Osaka) Nanki Shirahama airport Annual Passengers in Concession Airports Current Status mn (2015) Starts

Takamatsu 1.81 April 2018 Implementation policy announced in July, and application guideline for bidders announced in September

Implementation policy and application guideline for bidders to be announced in September and October 2016 Kobe 2.45 Spring 2018 respectively

Fukuoka 20.97 April 2019 Implementation policy to be announced between March and April 2017

Hiroshima Airport Revitalization Meetings, which started in December 2015, have been discussing on the topic Hiroshima 2.67 (2019) of utilizing concession PFI

New Chitose 20.46 Implementation policy to be announced in summer 2018. The concession is expected to include all 7 airports （ April 2020 incl. 7 airports in （） in Hokkaido (New Chitose, Kushiro, Wakanai, Hakodate, Asahikawa, Obihiro, Memanbetsu) Hokkaido) 25.62

Airport Toll Road Water System/Sewage Educational Facility

Op. Revenues ¥450.6 bn Op. Revenues ¥238.3 bn Op. Revenues ¥4,281.3 bn Museum（and quasi-ones） Op. Profits ¥10.3bn EBITDA ¥135.7 bn Net Income ¥315.2 bn 4,246 Public sports facility *FY2014 figures *FY2014 figures *FY2014 figures 27,469 Market Scale *Aggregate of 27 airports *Aggregate of 33 regional toll *Aggregate of public water system Cultural hall 1,742 operated by the government road companies operators including 1348 water Others 20,347 suppliers, 749 simple water suppliers, and 591 sewage operators

FY2016 FY2016 Bidding to start (Takamatsu) Discussion points to be FY2016 FY2016 Schedule reviewed by Ministry of After FY2017 Bidding to start (Aichi) Bidding to start (Hamamatsu/Sewage) education, culture, sports, (Kobe, New Chitose, Fukuoka, science, and technology. Hiroshima, and others)

Air transportation demand, Major highway Regional demand (correlates with Main CF factors Regional demand commercial facilities demand/development population)

Potential ○ Commercial ◎ △ × （facility type dependent） Upside

Regional/national economic Regional economic condition Regional economic Main Risks condition, FX, plague, political and competition from other Shrinking population condition risks..etc transportation alternatives

Trading companies, railway Railway companies, Project Sponsors companies, regional business Water engineering companies, trading Sports/Leisure related Construction (Presumption) circles, real estate companies, municipalities companies, house builders companies/consultants developers…etc. Note: Ports are also potential concession PFI candidates

Copyright © 2016 ORIX Corporation All rights reserved. 14 ORIX’s Concession Business Important Position in the Group ORIX leverages its operational know-how to evolve, diversify and adapt its portfolio to take advantage of changing macroeconomic conditions

Credit Screening and Banking Asset Management Finance Capability Investment Banking Life Insurance

Investment Lending

Real Estate Concession Business

Leasing Servicer Leasing

Automobiles Environment/Energy Ships/Aircraft Expertise in 2014 Real Estate Business Division appointed a team Handling to study about the Concession Business Tangible Assets 2015 Concession Business Development Department was established 1964 2016

 PPP/PFI, including concession PFI, is one of the important policies under the government’s current effort in its Integrated Economic and Fiscal Reforms  ORIX Group intends to take an proactive part in the concession PFI and other various PPP/PFI opportunities

For fields that require specialized technical expertise, we accumulate internal know- how through alliance with other firms, and strengthen our own capability Projects abroad Group-wide cooperation Non-airport (ORIX business units including projects Real estate, Investment and Partner Overseas expansion Operation, and Environment Secure multiple upon accumulation of and Energy) airport operations domestic track records

Secure track records in Kansai/Osaka Japan, accumulate business Airports know-how/expertise, and strengthen human capital

Solidify Business Platform

 ORIX has maintained profitability for the past 51 consecutive years

Net Income Attributable to ORIX Corporation Shareholders

FY2016.3 Record Net Income JPY Bn 300 FY2009.3 Collapse of Lehman Brothers 250 FY2002.3 Bursting of the IT 200 Bubble FY1998.3 Asian Financial Crisis 150

FY1993.3 100 Bursting of the Economic Bubble

0 1964 1975 1980 1985 1990 1995 2000 2005 2010 2015

Copyright © 2016 ORIX Corporation All rights reserved. 18 About ORIX Assets by Segment  Our highly diversified company contains many complementary businesses, providing ample opportunity for synergies and knowledge sharing

Corporate Financial Services

Lending, Leasing, fee businesses Overseas Business 12% Leasing, Lending, Investment 24% Maintenance Leasing 8% in bonds, Asset management, Ship/Aircraft-related Segment Assets Automobile leasing and rentals, operations Approx. 8.6Tn yen 8% Car sharing, Test and measurement instruments and IT-related （As of 2016.6.30) equipment rentals and leasing 8% Real Estate Retail 40% Real estate development/rental/ Life insurance, Banking, facility operation, REIT asset Card loan business management, and real estate investment and advisory services Investment and Operation

Environment and energy-related business, Principal investment and Loan servicing (asset recovery), Concession business

 These materials have been prepared by ORIX Corporation (“ORIX” or the “Company”) solely for your information and are subject to change without notice. The information contained in these materials has not been independently verified and its accuracy is not guaranteed. No representations, warranties or undertakings, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness, or completeness, or correctness of the information or the opinions presented or contained in these materials.

 These materials contain forward-looking statements that reflect the Company’s intent, belief and current expectations about future events and financial results. These statements can be recognized by the use of words such as “expects,” “plans,” “will,” “estimates,” “projects,” “intends,” or words of similar meaning. These forward-looking statements are not guarantees of future performance. They are based on a number of assumptions about the Company’s operations and are subject to risks, uncertainties and other factors beyond the Company’s control. Accordingly, actual results may differ materially from these forward-looking statements. Factors that could cause such differences include, but are not limited to, those described under “Risk Factors” in the Company’s most recent annual report on Form 20-F filed with the U.S. Securities and Exchange Commission and under “Business Risk” of the securities report (yukashouken houkokusho) filed with the Director of the Kanto Local Finance Bureau.

 Some of the financial information in these materials is unaudited.

 The Company believes that it will be considered a “passive foreign investment company” for United States Federal income tax purpose in the year to which these consolidated financial results relate and for the foreseeable future by reason of the composition of its assets and the nature of its income. A U.S. holder of the shares or ADSs of the Company is therefore subject to special rules generally intended to eliminate any benefits from the deferral of U.S. Federal income tax that a holder could derive from investing in a foreign corporation that does not distribute all of its earnings on a current basis. Investors should consult their tax advisors with respect to such rules, which are summarized in the Company’s annual report.

 Nothing in this document shall be considered as an offer to sell or solicitation of an offer to buy any security, commodity or other instrument, including securities issued by the Company or any affiliate thereof.

ORIX Website http://www.orix.co.jp/grp/en/ IR Website http://www.orix.co.jp/grp/en/ir/

ORIX Corporation Corporate Planning Department World Trade Center Building., 2-4-1, Hamamatsu-cho, Minato-ku, Tokyo 105-6135, Japan Tel: +81-3-3435-3121 Fax: +81-3-3435-3154 [email protected]