Japan's JGIA targets Wow World take-private
Japan Growth Investments Alliance (JGIA) has won board approval from Tokyo-listed Wow World Group for a take-private that values the business communications technology provider at JPY 6bn (USD 46.4m).
JGIA aims to acquire up to 4.9m shares at JPY 1,502 apiece with a minimum acceptance threshold of 3.3m shares, according to a filing. The stock has traded close to JPY 1,100 for the past two months and was at JPY 1,090 mid-session on February 1, giving the company a market capitalisation of JPY 4.2bn.
Wow World started as a website development services business in the mid-1990s and gradually moved into communications technologies such as webcasting, marketing automation, cloud services, and email distribution systems. In 2011, it entered China and Vietnam, going into Thailand the following year.
During the 12 months to March 2022, sales were up 20% year-on-year to JPY 2.8bn, while EBITDA grew 4.9% to JPY 595m and net profit declined 4.1% to JPY 213m. The company cited increased labour costs among the negative drivers on profit, along with costs related to a buildout of the cloud business.
Labour shortages in Japan have been a significant impediment for private equity in the market, with Teikoku Databank estimating about 50% of companies nationwide are short-staffed. The phenomenon has spread from unskilled to skilled labour at a time when currency depreciation has eroded Japan’s appeal to foreign talent. Seemingly borderless tech companies have not been immune.
JGIA is acting via its second fund, which closed at JPY 38bn in 2020. The private equity firm – established in 2016 by Koichi Tateno, formerly a partner at Unison Capital – said it planned to leverage its longstanding strategic alliance with Japan Tobacco and public relations giant Hakuhodo in support of Wow World.
In 2021, JGIA acquired a majority stake in furniture and home décor business Francfranc from Seven & I Holdings, the parent of 7-Eleven. Since then, the company, which has stores in Japan and Hong Kong, has received additional investment from D Capital, another Unison spinout that is also an LP in JGIA’s second fund.
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