Welcome to the seventy-fourth edition of the Japan FinTech Observer.
We will host the Japan FinTech Observer weekly call again on Monday evening, starting at 8pm JST on LinkedIn Audio. You can find this week's event here.
Canadian Alimentation Couche-Tard (ACT), with one-fifth of the stores but 1.5x the market capitalization, is making a bid for 7&I Holdings. "Japan’s M&A scene may never be the same again," says Leo Lewis in the Financial Times.
The partnership of the Astar Foundation and Sony is due to launch Soneium, an Ethereum Layer 2. The ASTR token remains at less than half recent highs, and at about a quarter of a spiky peak. With an abundance of Layer 2s already in the market, this move smells like the "not invented here" syndrome.
The Fed will cut interest rates in September, and the JPY closed Friday nearer to USD 1.40 than to 1.50. Or, in other words, we are still just about where we started the year, when analysts were predicting up to six US rate cuts. Among the analysts we follow, there remains a split opinion regarding the next BOJ move: October or January.
Otherwise, here is what we are going to cover this week:
Venture Capital & Private Markets: M&A rebound signals a new era for corporate dealmaking in Japan, according to J.P. Morgan; MUFG Bank will make an additional investment in DMI Finance — a digital financial services business in India; the Cool Japan Fund (CJF) has decided to commit up to USD 20 million to a fund that invests in Japanese startups seeking global growth; GMO VenturePartners participates in India's TransBnk - Transaction Banking Platform Series A
Insurance: Dai-ichi Life and Microsoft have entered into a multi-year strategic global partnership
Payments: OBC, a developer of core business systems, and PayPay have concluded an MoU for digital salary payments
Banking: MUFG Bank has sold 24 million shares of U.S. Bancorp common stock; MUFG Bank also signed a Framework Agreement (FA) with the Ministry of Digital Technologies of Uzbekistan; the Financial Services Agency, in conjunction with the National Police Agency, requested additional measures to prevent the fraudulent use of savings accounts; the Financial Services Agency held several meetings with Japanese financial industry groups in July 2024, covering a wide range of topics
Capital Markets: the Tokyo Stock Exchange has provided a comprehensive update on its governance activities; Carbon EX has formed a business alliance with Tohoku Bank; Dojima rice futures started trading, and a listing ceremony was held this week
eXponential Finance Podcast with Professor Stephen Nagy
We have released the 140th edition of the eXponential Finance Podcast, featuring a discussion with Professor
Stephen Nagy
based on his latest edited volume, "Southeast Asia and the Indo-Pacific Construct."
M&A rebound signals a new era for corporate dealmaking in Japan, according to J.P. Morgan: (I) New guidelines from the Ministry of Economy, Trade and Industry on corporate takeovers and the Tokyo Stock Exchange reforms have helped pave the way for a new era of Japanese corporate governance and dealmaking in the region; (II) the Japan M&A market has had a strong first half, with deal volume up around 20% compared to same period in 2023; shareholder activism in Japan continues to gain momentum, increasing the number of takeover proposals
The Cool Japan Fund (CJF) has decided to commit up to USD 20 million to a fund that invests in Japanese startups seeking global growth opportunities; the national government originally created the Cool Japan Fund in 2013 to support overseas sales of cultural products such as anime and Japanese cuisine, and saw it as a potential winner that could drive growth; by the end of 2022, it had racked up a deficit of JPY 30.9bn (USD 218m) from investments that did not pan out, and there were heated discussions among the ministries whether CJF should be folded
eXponential Finance Live with Terence Ho, Co-Founder & Chief Commercial Officer at Nanoinsure
We hosted an eXponential Finance LinkedIn Live session with
Terence Ho
, Co-Founder & Commercial Officer at Nanoinsure Technology Group, an insurance platform provider that has recently entered the Japanese market; the recording of the discussion is available on the Tokyo FinTechYouTube channel
Dai-ichi Life and Microsoft have entered into a multi-year strategic global partnership to accelerate digital innovation and the organization’s transformation into the “Insurance services business” beyond the current traditional life insurance business; the vision for the Dai-ichi Life Group in fiscal 2030 is to become №1 in Japan in the 4 areas of “Customer satisfaction”, ”Employee satisfaction” , “Services innovation” and “Enterprise value”, as well as to become an insurance group in the global top tier and a leader in the future of the insurance industry
OBIC Business Consultants (OBC), a developer of core business systems, and PayPay have concluded a memorandum of understanding regarding functional collaboration for digital salary payments; on August 9, 2024, PayPay was designated by the Minister of Health, Labor and Welfare as a money transfer business that supports digital salary payments to the accounts of money transfer businesses; on August 14, the “PayPay Salary Receipt” service was launched for employees of SoftBank Group companies, and the service is scheduled to be launched for all PayPay users by the end of 2024
Banking
MUFG Bank has sold 24 million shares of U.S. Bancorp (“USB”) common stock it had additionally acquired in August 2023; the sale of USB shares was completed with consideration to MUFG’s regulatory capital efficiency; MUFG will continue to hold its initial investment of approximately 44 million shares given its intention of maintaining a long-term relationship with USB remains unchanged
The Financial Services Agency held several meetings with Japanese financial industry groups in July 2024, covering a wide range of topics; as the participation is rotating on a monthly basis, not all industry groups are represented every month; in July, the FSA met with the Japan Regional Bank Association, the National Association of Credit Banks, the Trust Association, the Life Insurance Association of Japan, the General Insurance Association of Japan, and the Japan Securities Dealers Association
Capital Markets
Household financial assets by 5-year age brackets
The Cabinet Office has published its annual "Economic & Fiscal Report", which included the above graph, highlighting the older generation holding massive assets, and much of that in cash; "the challenge is to encourage households to effectively utilize their wealth in economic activity"
Carbon EX has formed a business alliance with Tohoku Bank; through the provision of carbon credits and non-fossil fuel certificates on “Carbon EX,” a carbon credit and emissions trading platform operated by Carbon EX that handles a wide range of credits from around the world, the two companies will support corporate environmental contribution activities
Soneium, by Sony Block Solutions Labs is building a public Ethereum layer 2 next-generation blockchain ecosystem designed to invoke emotion and empower creativity; Soneium will connect the blockchain technology (Web3) with the everyday internet services (Web2); this connection will make things easier for users, helping more people start using blockchain; it's a strategic initiative to integrate Astar Foundation Network (zkEVM) more closely with Soneium, leveraging the strengths of both ecosystems to drive forward the vision; other launch partners are Alchemy, Chainlink, Circle, Optimism Foundation, and The Graph
Casio announced a collaboration with the move-and-earn Web3 lifestyle app STEPN GO as part of the VIRTUAL G-SHOCK project involving the G-SHOCK brand of shock-resistant watches; FSL, the Web3 product development studio that operates STEPN GO, will release a limited-edition offering of 800 total NFTs featuring four types of virtual sneakers; these exclusive digital items will be available via Raffle Mint on MOOAR, FSL’s NFT marketplace, from August 26 through 29
The Last Word - Grok
Grok, draw me a picture of a peaceful Japan. I just had nothing else to say today.
We have also created two LinkedIn groups, the "Japan Startup Observer" if your interest in Japan goes beyond FinTech, and the "FinTechs of India" to capture the developments on the subcontinent. We invite you to join both these groups.
