Targets Investments in US$10M to US$50M Range Initially
Yamada Consulting Group Co., Ltd. (“YCG”) of Japan and ZICO Holdings Inc. (“ZICO”) announced today they would offer a joint platform for advisory and consulting services to bridge a major funding gap between Japanese investors and ASEAN small and medium enterprises (“SMEs”), with initial target funding of between US$10 to US$50 million each.
The Strategic Collaboration Agreement was signed by Mr Keisaku Masuda, President and CEO of YCG, a leading independent consulting group based in Japan which is listed on the First Section of the Tokyo Stock Exchange, and Mr Chew Seng Kok, Managing Director of ZICO, a multi-disciplinary professional services firm listed on the Catalist Board of the Singapore Exchange.
The collaboration takes place amidst economic uncertainty, worsened by the Covid-19 crisis, as many Japanese corporations accelerate transformation through acquisitions in the face of an ageing population and slow domestic growth; while ASEAN SMEs urgently need access to more sources of funding beyond traditional bank borrowings.
With over 900 staff and offices in 13 Japanese cities, ASEAN, Shanghai and Los Angeles, YCG recorded an average of US$22.4 million in pre-tax profits for the last three financial years leading up to 31 March 2019. YCG focuses on, amongst others, restructuring and business succession consulting for Japanese corporations, many of whom seek acquisitions, alliances and extended business networks, offering major buy-side opportunities which the YCG-ZICO platform can address.
On the sell-side, ASEAN SMEs tend to be family-owned, dependent on internal resources and often lack access to bank borrowings and external investors. The Covid-19 situation may make this even more acute.
The confluence of these factors offers an exceptional opportunity for the YCG-ZICO platform to provide access to private equity and institutional investors from Japan looking for good business targets in ASEAN. While Japanese companies had made ad hoc attempts to seek such targets, the pace of transformation has accelerated recently.
YCG and ZICO will provide ASEAN SMEs with professional services support and access to these corporations as well as pre-IPO investors, and providers of mezzanine capital and private equity, initially targeting those in the range of US$10 million and US$50 million each. The platform will also leverage on YCG’s expertise to provide technical, consulting and corporate restructuring services. Projects will be geared towards achieving business succession and transformation for target companies and SMEs, eventually leading up to exits through IPOs or trade sales.
The impetus from the buy-side is driven in part by activist shareholders in Japan demanding better returns and performance. YCG’s Mr Masuda revealed that based on independent estimates[1], 63% of Japanese corporations are reviewing their direct investment portfolio every three months, with about half of them saying they intend to acquire companies over the next year.
Giving a breakdown of YCG’s investor base, Mr Masuda said the Food & Beverage and Engineering/Construction sectors each comprised 26.3% followed by Energy/Oil and Gas (15.8%), IT & Digital and Logistics (5.3% each) and Others (21.0%).
While YCG will introduce buy-side investors from Japan, ZICO will tap on its network of partners and professionals who can provide deep local knowledge and insights of target companies in ASEAN.
YCG and ZICO will help corporations seeking investments, divestment or other means to grow revenue and profitability. Both sides will develop and execute corporate finance and M&A advisory projects; identify and facilitate international buyers and sellers; create, secure and execute sell-side and buy-side mandates; and support geographic acquisition strategies of corporate finance clients.
Due to the concerns arising from the Covid-19 coronavirus health situation, the momentum to increase investment and flows and business relationships between the two regions is expected to gather pace, boosted also by the strong network and deep client relations that both parties have in their respective regions.
Commenting on the strategic collaboration, Mr Keisaku Masuda said: “Japanese corporations are more eager than before to capitalise on opportunities in ASEAN. The potential for a surge in investment flows between Japan and ASEAN, hastened by the Covid-19 situation, makes it more conducive for both parties to collaborate. We see ZICO as a partner who shares our aspirations in seeking to build economic bridges between the two regions.”
“This strategic collaboration lays the foundation of a platform to provide advisory and consulting services to Japanese investors and businesses in ASEAN. It will facilitate the provision of such services between Japanese companies who are seeking acquisition targets and ASEAN businesses, particularly SMEs, who intend to obtain investments or divest their businesses to international investors,” said Mr Chew Seng Kok.
In line with the Strategic Collaboration, ZICO also announced separate agreements with two Malaysian sell-side advisory companies. They are Sage 3 Sdn. Bhd., a leading corporate finance advisory firm offering a range of services including debt restructuring and financing, and Andersen Corporate Restructuring Sdn. Bhd., a boutique corporate restructuring firm. Both firms have an extensive client base and strong professional networks in Malaysia.
The collaboration with these leading independent Malaysian firms provides valuable access for businesses-seeking capital and investments for expansion from Japan. Consequently, this will play a key role in strengthening the collaboration between ZICO and YCG by facilitating the identification of acquisition and investment targets for Japanese investors in ASEAN.
[1] Source: EY 17 June 2019, Global M&A appetite at 10-year high fueled by portfolio reshaping (https://www.eyjapan.jp/newsroom/2019/2019-06-17-en.html)
About Yamada Consulting Group
Listed on the First Section of the Tokyo Stock Exchange, Yamada Consulting Group Co., Ltd. engages in the provision of financial consulting services. It operates through the following business segments: Business Consulting, Real Estate Consulting, Financial Planner (FP) related, and Investment and Fund. The Business Consulting segment includes business revival, operations, and financial consulting. The FP related segment includes marketing course, corporate training, and insurance consulting for financial planners. The Investment and Fund segment includes composition and management of investment partnership and investment business. The company was founded on July 10, 1989 and is headquartered in Tokyo, Japan. For more information, please visit https://www.yamada-cg.co.jp/en/
About ZICO Holdings Inc.
ZICO, an integrated provider of multidisciplinary professional services focused on the ASEAN region, provides advisory and transactional services, management and support and licensing services. Through its multidisciplinary services, regional capabilities and local insights, ZICO enables its clients to capitalise on opportunities across Southeast Asia.
The Group currently operates two key business segments: (i) Advisory and Transactional Services (“ATS”); and (ii) management support services business & licensing services (“MSSL”).
Within the ATS, ZICO provides legal services, Shariah advisory, trust advisory, corporate services, consulting services, investor services, wealth management services, corporate finance advisory services and immigration services. ZICO provides legal services only to the extent permitted in the relevant jurisdictions. In other jurisdictions, ZICO cooperates with and supports independent and autonomous law firms who are members of the ZICOlaw Network, in compliance with local professional regulations. Presently, ZICO provides legal services in Myanmar, Lao PDR and Thailand.
For the MSSL segment, the Group provides regional management services and business support services to members of the ZICOlaw Network and certain entities within the Group.
ZICO also engages in the licensing of the “ZICO”, “ZICOlaw” and “ZICOlaw Trusted Business Advisor” trademarks to members of the ZICOlaw Network and certain entities within the Group.
ZICO has business operations in Indonesia, Lao PDR, Malaysia (including Labuan), Myanmar, Singapore and Thailand. The Group augments its existing regional presence with that of the ZICOlaw network to extend its reach to all 10 countries in ASEAN. For more information, please visit http://www.zicoholdings.com.
For media queries, please contact:
WeR1 Consultants Pte Ltd
3 Phillip Street #12-01, Royal Group Building
Singapore 048693
Tel: +65 6737 4844
Email: zico@wer1.net
Yamada Consulting Group Co., Ltd. Singapore Branch
78 Shenton Way #24-01
Singapore 079120
Tel: +65 6221 7727
Email: asean-support@yamada-cg.co.jp