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(Bloomberg) — A unit of Ryobi Holdings Co., a bus route operator in rural Japan, is setting up an AI-powered hedge fund specializing in forex to survive a sharp drop in the country’s population outside Tokyo.
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Ryobi has enlisted Kyosuke Suzuki, a former currency trader at Societe Generale SA, to set up the fund by the end of the year. The hedge fund, part of Ryobi’s subsidiary, Ryobi Systems Co., will begin investing around the beginning of 2025.
Ryobi was founded 114 years ago as a short railway connecting towns and villages in Okayama, a prefecture located between Osaka and Hiroshima. Today, it is at the front line of the country’s demographic crisis, grappling with aging customers and shrinking communities. More than 30% of Okayama Prefecture’s residents were ages 65 or older as of 2022, with a handful of its towns at risk of disappearing by 2050.
The move follows the company’s previous investments in real estate, supermarkets and other areas as it tries to secure funds to maintain its bus fleet and grow.
Suzuki was hired by Ryobi President Toshiyuki Matsuda, whom he first met when they both worked at Sumitomo Trust & Banking Co., now Sumitomo Mitsui Trust Holdings Inc. Over a period of 18 months, Suzuki and five of Ryobi’s engineers conducted ¥300 million ($2 million) worth of currency transactions using the company’s own capital to test the stability and profitability of roughly 20 AI models.
“No matter how good the simulation is, it’s meaningless if you can’t win in actual trading,” the 45-year-old Suzuki said in a recent interview in Tokyo, adding that creating the trading system took longer than expected. “We will build — and sell — a track record of wins.”
The fund is designed to be a private investment trust, with sales limited to institutional investors, professionals and fewer than 50 high-net-worth individuals.
“The fund is targeting raising around ¥5 billion in the first year from local business owners and financial institutions,” Suzuki said. “We would like to start small.”
Ryobi’s information and communication technology division, to which Ryobi Systems belongs, is the group’s top profit churner, earning ¥4.9 billion, or nearly half of total ordinary income in the year ended March. Ryobi Systems also sells software such as tax payments systems to regional municipalities, competing with bigger players like Hitachi Ltd. and Fujitsu Ltd.
Ryobi may one day be able to sell AI systems to banks, or provide investment advice and other services, Suzuki said. “But for that to happen, we need to first make the fund a success.”
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