To our shareholders and investors

I extend my sincerest gratitude to our shareholders and investors for your continued understanding and support.
As of March 31, 2024, the Group’s assets under management (AUM) increased by 25.9% year over year to JPY 1,889.3 billion (Note 1). The growth in AUM increased our management fee revenue by JPY 1.522 billion to JPY 14.258 billion. With continued appropriate cost controls, we set a new record high for base earnings (Note 2) at JPY 6.348 billion (up from JPY 6.157 billion in previous fiscal year ended March 31, 2023), representing our stable earnings power and substantially reinforcing the foundation that underpins SPARX. Furthermore, operating revenue increased to JPY 7.476 billion (up by 31.1%) due to increased performance fees. Additionally, a close examination and sale of investment securities that had completed their role as seed investments in new investment strategies contributed to a significant increase in bottom-line profits to JPY 6.519 billion (up by 44.2%). We have found success with our hybrid earnings model of management and performance fees based on our platform of traditional investment strategies with alternative approaches, including the Japanese Equity Long-Short, Value Creation, Renewable Energy, and Private Equity investment strategies. We have also realized some profit from investments in new areas where we have planted seeds, making this a year in which SPARX’s uniqueness was prominent.
Since our inception, we have developed investment strategies for Japanese and Asian listed equities—including the Long-Short and Strategic investment strategies—to generate returns even in markets that have been in a prolonged decline since the bubble economy burst. During the financial crisis, we originated a relatively long-term strategy for real asset investment that focused on cash flow rather than capital gains. We also launched our Private Equity investment strategy with a similarly long horizon. In times of crisis, we have developed new investment strategies, carefully nurtured them on their own terms, and made them pillars of our business. As of March 31, 2024, 24% of our AUM was invested in the Real Asset and Private Equity strategies. As a result, we have increased our earnings stability and are better prepared for crises such as a stock market crash.
We have cultivated the four pillars of our investment strategy in this way, but the key shared among them is continuing to make good investments regardless of the strategy targets. While chasing scale is not an end in itself, I believe that by continuing to originate new investment strategies and maintain higher levels of investment, we should grow our AUM from its current figure of around JPY 2 trillion to JPY 3 trillion.
Among our key management indicators, base earnings and dividends are at record highs. We are also going to see our AUM achieve a record high of roughly JPY 2 trillion. We have not yet set new records in operating revenue and market capitalization. Still, we will do our utmost to reach record highs in these indicators by achieving our AUM goal of JPY 3 trillion.
We will continue striving to realize our mission “to make the world wealthier, healthier, and happier” as SPARX becomes “the most trusted and respected investment company in the world.”
We humbly request your guidance and encouragement into the future.
Shuhei Abe
President, CEO
SPARX Group Co., Ltd.
June 2024
- (Note 1)AUM at the end of fiscal year under review are preliminary figures (as of March 31, 2024).
- (Note 2)Base earnings demonstrate whether a business has the earning capacity needed for a sustainable, stable foundation. We use the following formula to calculate base earnings:
Base earnings = Management fees (after deducting commissions) - Ordinary expenses