Mitsubishi UFJ Trust and Banking Corporation (MUTB) is launching a new movable property trust. Specifically, the trust will hold GPS-equipped electrically assisted bicycles used for bicycle sharing. Through a collaboration with neuet, Inc., provider of the “Charichari” bike-sharing service that it operates in major cities in Japan, MUTB has become the trustee of hundreds of bicycles to be used for bike sharing in order to provide a financial product called the “Bicycle Fund Trust Beneficiary Right.” Unlike an investment trust, the price of this trust will be fixed and will not fluctuate, and revenues from bike rentals will be distributed if the right is retained for three years.
The investor in the project is a limited liability company in which MUTB invests. The project will build a track record and future external sales will be considered.

It all started with “a wish to contribute to carbon neutrality using the trust function” according to Takuma Okada, investigator in charge of the overall project at the New Business Group in the Corporate Business Planning Division’s Business Planning Department.

CO₂ emissions from bike sharing are less than those from trains and automobiles. Although particularly popular in the Tokyo metropolitan area, bike sharing has been operated across Japan and is gaining increasing publicity. MUTB has focused on its promise as a business providing transportation services for the “last one mile.”

”We thought creating a financial product for bike sharing would help invite investment in the green transformation (GX) field, support the mechanism of decarbonization, and support local infrastructure,” says Okada. “By providing this product, we aim at business co-creation that benefits all sides through a financial cycle that touches society, client companies, investors and our company.”

This trust holding movable property is a new endeavor for MUTB, however. “We used to handle trusts holding movable property, such as railway equipment and personal computers, but stopped because of the difficulty in management,” says Masamichi Shibata, investigator in charge of development and management of the new product at the Product Development Group of the Corporate Business Planning Division’s Structured Finance Business Department. “But times have changed. Today, the sharing economy in which consumers do not own goods but borrow or share them is spreading. On the other hand, service providers must still hold movable property. As funding needs increase, the need for trusts set up to hold movable property has emerged. It is necessary to always have a grasp on where the movable property is, but bicycles used for sharing are equipped with GPS and service providers can locate them at any given time. Because of the increasing need and the technological advances already made, we took on the challenge of developing a new trust product for holding movable property.”

But new endeavors often involve hardship. “There are a lot of things we have to check, including legal issues and accounting issues,” says Shibata. “We had some very heated discussions with external experts and MUTB’s specialist team. At one point we even almost gave up on the idea, but we are finally on the cusp of releasing the product.”

Internal investment is planned to start at the end of September 2023 as an operational test with sales to institutional investors to begin in April 2024. Toshiki Hashirisaka, the senior investigator involved in studying the scheme and creating agreements at the Trust Product Group under the Structured Finance Division, explains the future prospects.

“We are envisioning sales to individual investors in the future,” he says. “We are considering an initial launch in Fukuoka and Kumamoto. But we would like to eventually expand it across Japan and expand collaboration to include other providers when needed. To that end and for customer satisfaction, we need sufficient verification, evaluation and to obtain a rating.”

And what motivates such venturing outside the scope of existing financial products?

“We are taking the first step by creating a financial product using electric bicycles,” says Okada. “Taking care of valuable client assets as a trustee so that they can be used for appropriate objectives and purposes or managing and evaluating them appropriately is, I believe, the socially expected role of trust banks, not just for electric bikes but for any trust holding. Our purpose is to create a society that is safe and enriching for its members by engaging in trust-related business. We will address social issues existing in local communities and support those communities financially.”

Bicycles that you have invested in cruising around the city—this is something you may see in the near future.