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00:00You're head of investment banking. However, your background is in technology. Is that why you're
00:06here today? Well, I'm here today because it's one of our flagship events. As you know, technology
00:12broadly and then AI specifically is impacting every sector in the global economy and not only
00:18dominating the headlines, but dominating capital markets and dealmaking activities. So whether it
00:23be M&A or joint ventures partnerships, we've seen massive commitments of capital by the
00:30hyperscalers, but even more broadly as we're thinking about it. So today we have over 80
00:35clients, corporate clients presenting 500 or so investors. So very much looking forward
00:41to conversations from the likes of IBM, Rumentum, as well as David Golub from Golub Capital, who's
00:49one of the leading private credit funds, is going to be talking about where we are in the
00:53credit cycle. So over the next couple of days, we should be having some interesting conversations.
00:57What do you think the main themes are going to be this year, particularly compared to four
01:01years ago when you started doing this conference?
01:03Look, AI is clearly dominating the headlines, came into the fore a couple of years back with
01:09OpenAI and ChatGPT. But I think the conversation around AI is going to be a bit more nuanced.
01:15I think investors want to hear what are AI outcomes versus AI hype and specifically what
01:23are some of the more tangible use cases, what are some of the linkages, as you will, that
01:29would put investment to actual returns, whether it be revenue growth, acceleration in advancement
01:35of businesses. But I'd say conversely, investors will want to hear what are some of the hurdles,
01:40what are some of the challenges to adoption, whether it be around power, talent, supply chain,
01:49regulatory support. And I'll tell you, the one last thing that we've been talking about is supply
01:54versus demand. So are we at a place where supply is eclipsing demand? How broad is adoption of AI?
02:01So those are some of the themes that I'm looking to hear from companies.
02:05Are you hearing more about the use cases relative than what you were maybe a couple of years ago?
02:10Look, certainly the hyperscalers who have committed over 700 billion of CapEx this year have demonstrated
02:18not just investment, but use cases. We are beginning to hear of more enterprise use cases.
02:24But as you can imagine, the enterprise use cases have been uneven as enterprises are contending with not only access
02:33access to quality data, access to talent, but also putting in the guardrails in support of deployments.
02:42Technology companies have clearly been at the forefront of adoption and are actually contending with the other side of it,
02:48as you've been hearing about token maxing, as they're looking to channel perhaps some workloads or workflows
02:55into lower cost frontier models and are ensuring that utilization is consistent with budget.
03:02But for the enterprise, it is interesting in terms of adoption, which tend to veer towards more
03:09what I consider to be high ROI use cases and perhaps more experimental than what we'd hope over time
03:19would be much broader towards revenue acceleration and driving businesses.
03:26What's sort of the makeup of financing these days? It seemed like when this first started,
03:30a lot of it was just cash off the balance sheet. Then we started to see at least the more
03:34high-quality
03:34issuers go to the debt markets. We've seen Alphabet, for example, go to the equity markets.
03:38We've seen some creative deals with regards to convertibles. But what are people relying on most?
03:43Look, the quantum of investment will require access to all markets, private capital, public markets.
03:50You talked about Alphabet. I went into the bond market twice this year accessing cross-currency.
03:56So it wasn't just dollars. It was yen. It was Swiss francs. It was euros. It was sterling.
04:01And accessing the equity markets with both a mandatory convertible as well as equity issuances,
04:07plus the Berkshire Hathaway investment, plus a $40 billion ATM at the market program in place.
04:15So we will require, I would say, private and public. It will require equity and debt.
04:21And it will be across currencies and across geographies to support this massive AI build-out.
04:26Well, I'm curious. I mean, you mentioned some of the other countries in there. We've seen deals in Canada.
04:30We've seen deals in Japan. Obviously, you are tied to one of the three largest banks in Japan.
04:36And I've heard Mizuho America is kind of described as that bridge with regards to capital between what we're doing
04:42here with the AI build-out and, of course, the money in Japan. Is that accurate?
04:47Look, Japan is going through an economic revival that we have not been seen in decades.
04:54And that is very much supported not just by the normalization of monetary policy, but the fiscal policy driven by
05:01the current Takayashi-san administration and investments across infrastructure, defense, energy.
05:08AI is a place where Japan has been incredibly selective and, I would say, quite deliberate because it does stand
05:16to benefit the country in some of the challenges that it has had,
05:20whether it be around language barrier, care for an aging demographic, and labor shortages.
05:25And look, Semiconductors is an area where Japan has been incredibly strong.
05:30SoftBank, which is the most valuable company in Japan, has been a prolific investor in AI, OpenAI specifically.
05:37And so I do think that Japan will continue to be at the center of the growth that we're seeing
05:43globally.
05:43There has been some concern as to whether too much is being funneled through SoftBank,
05:48like the idea that there's this concentration in investments around one large investor, more or less.
05:53Is that valid criticism?
05:55I would not bet against Sonsan.
05:58Yeah.
05:58When we talk about what Japan is trying to do, obviously they don't have the traditional hyperscalers we think of
06:03here,
06:03but you talk about the big sovereign effort to build out their chip capabilities.
06:08Do you see that evolving into something bigger and broader, particularly in light of what we've seen with the shift
06:17in mindset here in the U.S.
06:19away from just digital AI to physical AI, maybe even biological AI and quantum, who knows what's next?
06:26Look, Japan is the fourth largest economy.
06:29It is also the U.S.'s closest ally in the Indo-Pacific region.
06:33It is going through this period in its time where not only the monetary and fiscal policy, which I talked
06:40about,
06:40but there is a change in corporate governance reform where both the government, through its policies as well as the
06:48Tokyo Stock Exchange,
06:49is looking to drive a change in mindset.
06:53And specifically what I think by that is that there is a drive towards being more open to foreign investments
07:01as well as deploying capital outside of Japan.
07:04And so you asked the question as to whether we see Japanese corporates looking to deploy capital absolutely outside of
07:11Japan and the U.S. specifically.
07:13I am curious. You joined Mizzouho about six and a half, seven years ago.
07:19You've done a lot. You've been involved in a couple of acquisitions to build out the business, fight for talent.
07:25There are some people that would look at that arm deal a few years ago as kind of putting Mizzouho
07:30Americas up into that bulge bracket map.
07:32I am curious as to kind of what potentially the next six and a half, seven years look like for
07:39Mizzouho Americas,
07:40for the investment banking business under your leadership.
07:43Well, our ambition is to be a top 10 global corporate and investment bank.
07:48And over the past couple of years, as you talked about, we have expanded our capabilities.
07:53I do think that today we're well positioned to be that one-stop shop to support our clients' ambitions.
07:59It is all about supporting our clients, but also being a place where people want to come and work.
08:04So over the next couple of years, what we're looking to do is execute on that strategy.
08:09It's very much in place, and I think we have all of the tools in order to pursue that.
08:14I do want to get your thoughts just on the IPO market.
08:17Obviously, we've got a slew of big IPOs coming, very concentrated in AI with SpaceX, potentially anthropic and open AI.
08:25Is there a sense that as these companies come to market, the mega companies, is that going to bring some
08:31of the smaller companies to the market as well?
08:34Or is this really just about those behemoths that I just named?
08:37Look, over the last couple of years, we have seen that scale matters.
08:41But in essence, scale has always mattered.
08:44But M&A transactions have been larger, LBOs have been larger, and IPOs have been of scale because economies of
08:51scale, branding, presence, what have you.
08:54I do think that there is a great opportunity to repopulate the public market.
08:58The number of publicly traded companies have halved over the last three decades, and the public markets have always served
09:05as a great platform and as a great vehicle, not just to elevate brand, but also to provide acquisition currency
09:13and monetization for employees.
09:16Look, what I do think will open the IPO markets is having some successful stories go out there.
09:21And so having some of those larger players come into the market, having a great outcome for that asset class,
09:27should help seed that next generation.
09:29I will tell you, Romain, that there is no lack of quality companies sitting on the sidelines.
09:34For the last several years have been sitting there, developing, maturing their business models, have seasoned management teams in place,
09:42and are very much looking for a market that will accept the debut.
09:47And final question, and this is more on the M&A side.
09:49I mean, we know there's a huge list of companies out there sitting in private markets.
09:54Some of them can IPO.
09:55Some of them can't, not necessarily because they're bad companies, but there's only so much the market can take.
09:59Do you see maybe the potential for additional M&A activity beyond what's already been telegraphed?
10:05Look, absolutely.
10:06It's never been about the quantum of quality companies out there.
10:12I do think that you need to bridge the bid-ask spread.
10:15Some of those captive companies, portfolio companies that you've been talking about, came into, or I should say, were taken
10:21private in the 21 timeframe.
10:24And the exit multiple for those companies may be different than the entrant multiple.
10:29So there's a bit of perhaps a reckoning or a capitulation as to what type of return you want to
10:35achieve on your investment, but it is not because of a lack of companies.
10:40And candidly, a company that's growing at 5%, 10%, 15% and generating significant cash flow can be incredibly interesting
10:49and accretive as an M&A target that would achieve incremental synergies as part of a broader platform.
10:55Do you think that when we start to get these mega-IPOs, does that create, is that going to sort
10:59of close the gap or the perception of that gap, or does it widen it even further?
11:03Look, I think IPOs and M&A create this natural tension because it does create an alternative for a company
11:10to either debut into the public market or have an exit with a premium as an M&A target.
11:16And so for me, it's not an or, it's an and.
11:20All right, and final question, Mahal, and this goes back to just kind of what you've built here.
11:24I mean, just give me the sense, like, if there's a client, potential client, that's maybe knocking on your door,
11:29but maybe also knocking on J.P. Morgan's or Goldman's or someone else's, what is the pitch as to why
11:35they should choose Mazuha?
11:37I was waiting for that question.
11:40Look, one of the things I would tell you and our CEO, Kihara-san, would tell you is that we
11:45are a global bank with deep Japanese heritage.
11:48As one of the largest banks in Japan and also one of the largest banks globally with over $2 trillion
11:54of balance sheet, we can provide a solution across lending, capital markets, and advisory, and with a global footprint.
12:02Because we, despite all talk of deglobalization, we're incredibly interconnected world.
12:07And so access to Japan being the gateway to Asia is a big differentiator, which I think puts us as
12:15very much apart from the other firms in the U.S.
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