MITSUI and Co, one of the largest sogo shosha, or general trading houses in Japan, is planning to set up a Singapore real estate investment unit as part of the group's ambitious transformation.
The move, expected by the end of the year, is among Mitsui's efforts to build new core businesses in mobility, healthcare, nutrition and agriculture as well as retail and services.
The firm will look to invest in commercial and industrial buildings such as data centres and warehouses, said Taku Morimoto, chief executive officer of Mitsui & Co (Asia-Pacific) Pte Ltd and Singapore country head.
"In Singapore it's a little bit in an oversupply position now, but it's kind of a cyclical business," he told The Business Times in an interview. "In the long term we see the growth opportunity."
The move will strengthen Mitsui & Co's activity in the property market here.
Last year, it partnered urban solutions provider Ascendas-Singbridge Group and real estate developer Tokyo Tatemono Co to redevelop the former CPF Building at 79 Robinson Road, with Mitsui and Tokyo Tatemono jointly holding a 35 stake.
In 2012, it also teamed up with Ascendas to build Fusionopolis Phase 5, with Mitsui taking a 25 per cent stake in the joint venture.
With the new business unit, the group will not only invest in the Singapore market, but also in South-east Asia, said Mr Morimoto. For a start, it will transfer six to seven staff from Tokyo, and eventually expand the desk with more local staff.
In Singapore, the conglomerate, which first set up a representative office here in 1891, already has its fingers in many pies, from commodity trading to car-sharing services.
Mitsui & Co (Asia-Pacific) Pte Ltd made US$2.06 billion in revenue in the last financial year, with US$1.11 billion contributed by the trading of chemicals.
The business here has also since 2007 been the regional headquarters for its 28 offices in the Asia-Pacific stretching from New Zealand to Pakistan, and employs about 300 staff.
Four growth areas
Mr Morimoto, who moved to Singapore in April, said that his mission is to establish new growth areas for the company. The Mitsui & Co behemoth, which recorded 4,364 billion yen (S$52.78 billion) in revenue for the 2017 financial year, currently has three core businesses: resources and energy, machinery and infrastructure, and chemicals.
In April this year, it unveiled a new three-year plan focusing on four growth areas of mobility, healthcare, nutrition and agriculture, retail and services. The group wants to ride on Asia's expanding middle-class population and the growing North American economy.
"We would like to have value-added businesses that are less volatile and have more growth opportunities," Mr Morimoto explained. This comes as Mitsui in its 2016 financial year recorded the first consolidated loss in the firm's 70-year history due to the lacklustre resources and energy sector.
Compared to the existing core businesses that are upstream in nature, the new growth areas will be focused on the consumer.
"We will focus more on the consumer side because we see some of the bargaining power shift there," said Mr Morimoto, especially as digitalisation across all sectors cuts out middlemen.
Cars, clothes, care
In mobility, Mitsui & Co had in 2010 bought Car Club Pte Ltd in Singapore, in anticipation of a cultural shift from car ownership to renting. It had also started a similar business in Japan in 2008. The group provides motorcycle financing in Indonesia, Thailand and India as well, he noted.
In retail, Mitsui & Co in 2015 took a 20 per cent stake in Singapore-based sports and lifestyle retailer Triple which holds exclusive distribution rights for American sportswear brand Under Armour in nine countries across South-east Asia.
That same year, it also acquired a 40 per cent stake in MIMS Group, which provides drug-related information to healthcare professionals including 450,000 doctors in the Asia-Pacific region.
This is part of a healthcare ecosystem business that the group first started building up since 2011, when it bought a 30 per cent stake in IHH Healthcare Berhad for US$1 billion, said Mr Morimoto.
Since then, it has also invested in US dialysis clinic operator DaVita Care and Kuala Lumpur-based Columbia Asia Group which operates hospitals in Malaysia, India, Indonesia and Vietnam targeted at middle-income patients.
In nutrition and agriculture, Mitsui & Co in September this year started milk production in Indonesia. It has also in 2013 invested in the largest vertically-integrated Vietnamese shrimp processing company and exporter, Minh Phu Hau Giang Ltd Liability Company.
In all, the Tokyo-headquartered group has a substantial war chest of 1.7 trillion to 1.9 trillion yen for capital expenditure in the next three years, with two-thirds of this expected to go toward non-resources businesses.
By 2020, non-resources businesses are expected to contribute 200 billion of its 440 billion yen profit target. This, notably, is similar to the profit mix for the 2017 financial year - when they made up 140 billion yen toward a total profit of 306.1 billion yen - as the firm is still expecting continued growth in its traditional resources business.
Markets such as India, Bangladesh, Thailand and Indonesia will face energy shortages as they develop, according to Mr Morimoto. Mitsui & Co has LNG assets in Australia, Middle East and the US that can supply to these countries, he added.