Aozora Bank : Announces New Investors in Business Succession Fund “Succession Investment Limited Partnership, II” and Final Closing

October 31, 2023

Aozora Bank, Ltd.

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Aozora Announces New Investors in Business Succession Fund "Succession Investment Limited Partnership, II" and Final Closing

TOKYO October 31, 2023 - Aozora Bank, Ltd. (President and CEO: Kei Tanikawa; Head Office: Tokyo) ('Aozora' or 'the Bank') announced today that The Senshu Ikeda Bank, Ltd. (Representative Director, President and CEO: Atsushi Ukawa; Head Office: Osaka City) and The Fukui Bank, Ltd. (Director, President and Representative Statutory Executive Officer: Eiichi Hasegawa; Head Office: Fukui City) have agreed to invest in "Succession Investment Limited Partnership, II" ('Fund II'). Gifu Shoko Shinkumi Bank (President: Atsuo Morishima; Head Office: Gifu City) has also agreed to increase its investment in Fund II, and the fund is now closed to new investors.

Fund II is a business succession fund launched in August 2022 by AJ Capital Co., Ltd. ('AJ Capital'), a fund management company jointly established by Aozora and Japan Asia Investment Co., Ltd. (President and CEO: Tetsuro Shimomura; Head Office: Tokyo) ('JAIC').

As a successor to "Succession Investment Limited Partnership, I" ('Fund I,' 3.0 billion yen in total capital) established in June 2017, Fund II has continued to be marketed for further expansion since its inception. As a result, the number of limited partners ('LP Investors') for Fund II has increased to 15 financial institutions (up 25% compared to Fund I) and its total capital has reached 5,101 million yen (up 70%).

Both Fund II and Fund I focus on a small cap zone companies (less than 1 billion yen in corporate value) that have not received much attention from existing investment funds as main investment targets. The number of investment consultations provided by AJ Capital is increasing each year, which signals the growth in potential needs and expectations of the market. Fund I makes two or three investments a year, which is the result of its enhanced name recognition in addition to investment consultations from and collaborations with LP Investors. Of eight companies Fund I has invested in to date, four have already completed business succession mainly to local leading companies with the support of LP Investors. As providing solutions to business succession issues faced by companies that fall within the target zone of Fund II is becoming more important among regional financial institution investors, Aozora's track record of collaborating with LP Investors has been recognized with the expectation of additional collaborations. This is thought to be the reason why Fund II has attracted many LP Investors.

Aozora Bank, Ltd. 6-1-1 Kojimachi, Chiyoda-ku, Tokyo 102-8660, Japan ℡03-6752-1111

Fund II plans to make investments totaling 1.0 billion yen per year going forward, and has seen steady progress with its first and second investments executed in May and September 2023. Leveraging Aozora and JAIC's long-standing track record and expertise in investment and M&A transactions, Fund II continues striving to provide solutions to smooth business succession through the formulation of capital policy, investments, and a range of post-investment growth support.

The Aozora Group has set forth "business/asset formation, transfer to the next generation" as one of its Key Sustainability Issues (ESG Materiality). As outlined in its new Mid-term Plan "Aozora 2025" (FY2023-25) announced on May 17, 2023, Aozora works to promote medium- to long-term engagement with customers to drive mutual growth in three phases (Fostering/Change/Recovery) where the Aozora Group plans to leverage its strengths. Fund II constitutes an integral part of Aozora's business succession consulting services as well as investment activities.

JAIC promotes inclusive and sustainable industrialization by operating funds that support the business succession of SMEs under the following corporate mission: "As an investment company that links Japan with the rest of the Asian region, we are committed to contribute to the creation of a safer, more stable and efficient future society under the circumstance of structural problems derived from declining birthrate and increasing aging population."

The Aozora Group intends to continue contributing to regional revitalization with a view to Japan's further economic development by supporting SMEs, the core of the regional economy, in their smooth business succession through Fund II going forward.

Name	Succession Investment Limited Partnership, II
Address	2-4,Kudan-kita3-chome,Chiyoda-ku, Tokyo
Established	August 16, 2022
General Partner	AJ Capital
Capital	5,101 million yen
	Aozora Bank, Awa Bank, Senshu Ikeda Bank, Ehime Bank,
Limited Partners	Kagoshima Bank, Gifu Shoko Shinkumi Bank, Keiyo Bank,
SHONAI BANK, Towa Bank, Tottori Bank, Bank of Toyama,
(in Japanese alphabetical order)
Japan Asia Investment, Fukui Bank, Hokuto Bank and
	JAPAN POST BANK
Main investment targets	Japanese SMEs with business succession challenges

Aozora Bank, Ltd. 6-1-1 Kojimachi, Chiyoda-ku, Tokyo 102-8660, Japan ℡03-6752-1111

Name	AJ Capital Co., Ltd.
Address	2-4,Kudan-kita3-chome,Chiyoda-ku, Tokyo
President and CEO	Masayuki Kobayashi
Established	April 24, 2018
Capital	20 million yen (incl. capital reserves)
Shareholder composition	Aozora Bank: 50%; JAIC: 50%

(Contact: Tsutomu Jimbo, Business Strategy Division 03-6752-1217)

Aozora Bank, Ltd. 6-1-1 Kojimachi, Chiyoda-ku, Tokyo 102-8660, Japan ℡03-6752-1111