Korea's Orchestra buys electronic darts machine maker

This is the firm’s third buyout – and because Orchestra operates on a project fund basis, the deal has been executed by its third fund – since converting from an M&A advisor to a GP structure in 2017. LPs in the fund come from Korea and Japan. The equity contribution amounts to KRW72 billion.

Orchestra has taken 86.3% stakes in two entities, Korea-based Hong International and the company’s distribution business in Japan. They are responsible for Phoenix Darts machines, which feature automated scoring, online gaming, and value-add membership services. The company has 27,000 machines in 27 countries across Asia, Europe and North America. It regularly hosts international tournaments and professional leagues for promotional purposes.

Over the past seven years, Hong International has generated compound annual revenue growth of 4.3%. Orchestra plans to drive further growth through expansion strategies in Japan and Korea – the company’s core markets –  developing new sales channels outside of the traditional bars and restaurants, and business development in the chiefly Western markets where corkboard-based darts are still dominant.

“Orchestra was drawn to Hong International because of its outstanding financial performance with high EBITDA margins through the globally recognized Phoenix Darts brand supported by a wide and dedicated customer base. Also, stable cash flow has been generated from digital darts machines installed globally, through rental business model,” said Sean Lee, a principal at the private equity firm, in a statement.

Founded by Jay Kim, formerly of The Riverside Company and PineBridge Investment, Orchestra focuses on cross-border deals that involve Korea, Japan, and China. The firm’s previous acquisitions were Japanese golf equipment distributor Maruman – it secured full ownership of the Korean subsidiary and then launched a tender offer to secure majority control of the Japanese parent – and Korean TV commercial post-production house Seoul Vision.

The three funds have total assets under management of $220 million and seven investments have been completed to date, including bolt-on acquisitions.

Project fund activity has grown steadily in Korea in recent years due to the emergence of a new generation of GPs, a relaxation in regulations that has made it easier to set up asset management firms, and the sheer volume of capital local institutional investors must put to work. A general wariness of blind pool funds among these investors is another contributing factor.

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• Topics
• North Asia
• Buyouts
• Consumer
• South Korea
• Japan
• Orchestra Private Equity