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Announcement of Acquisition of Shares in Hotspring Ventures Limited, Operator of "Wahanda", an Online Beauty Reservation Service in Europe
May 1, 2015
Recruit Holdings Co., Ltd. (hereinafter the "Company") has announced that it has decided to acquire shares in Hotspring Ventures Limited (Headquarters: London, England; CEO: Lopo Champalimaud; hereinafter "Hotspring"), an European online hair and beauty marketplace, through the Company's consolidated subsidiary in the U.K. and the wholly owned corporate venture capital company "RGIP LLC" (Headquarters: Chuo-ku, Tokyo; Representative: Kazumasa Watanabe; total investment amount: ¥4.5 billion; hereinafter "RGIP"), and to make it a subsidiary of the Company's group, as outlined below.
The existing management team of Hotspring own a portion of shares of the Company's consolidated subsidiary in the U.K., thereby making them indirectly shareholders in Hotspring. The management team will continue to oversee management of Hotspring together with the Company.
1. Purpose of the acquisition of the shares
Since launching its online beauty appointment booking services in the U.K. in 2012, Hotspring has been operating a consumer marketplace and providing sophisticated salon management software, free of charge, to spas and hair and beauty salons. Led by an excellent management team, with extensive experience in online reservations, Hotspring is currently the market leader in online hair and beauty bookings in Europe, operating in 5 countries (U.K., Germany, Lithuania, Switzerland, and Austria), with approximately 12,000 listed salons as of April 2015.
The opportunity in the European beauty market is high compared to the rest of the world; however, the adoption of online reservations in the beauty industry is still less than 1% in the 5 major EU countries (U.K., Germany, France, Italy, and Spain), which is extremely low compared to the travel market. Hotspring's initial growth shows that online reservations in the beauty market offer a huge opportunity and significant growth can be expected in the future.
The Company, following its investment in Hotspring in July 2014 (through RGIP) and subsequent discussions regarding the EU growth strategy, believes combining Hotspring's marketing capabilities and reservation expertise, with the Company's experience in the beauty industry gained from Hot Pepper Beauty, will create a global leader in the online beauty reservations market. The Company has therefore decided to acquire the shares in Hotspring and make it a subsidiary as its first fully-fledged overseas operation in the beauty field.
2. Background
The Company has a long-term vision to become a group providing the number one global matching platform in each of the verticals in which it operates. That includes being the number one in the Marketing Media business by approximately 2030, and the global number one in the HR business by approximately 2020.
The Company is proactively entering new verticals and expanding existing businesses, through M&A in Japan and overseas, financed by the stable cash flow generated from existing domestic businesses. This transaction will help expand the Company's Lifestyle operations which includes travel, dining and beauty.
3. Outline of subsidiaries acquiring the shares
(1) RGF Beauty UK Ltd.
| (1) Name | RGF Beauty UK Ltd. |
|---|---|
| (2) Location | Riverbank House, 2 Swan Lane, London EC4R 3TT. |
| (3) Title and name of the head | Chairman: Kazumasa Watanabe |
| (4) Description of business | Special Purpose Acquisition Company |
| (5) Capital | ₤0.01 |
| (6) Major shareholders and shareholding ratio | Recruit Holdings Co., Ltd. 100.00% |
(Note)
The existing management team of Hotspring is scheduled to hold 10.65% of shares of RGF Beauty UK Ltd. on the date of execution of share acquisition.
(2) RGIP LLC
| (1) Name | RGIP LLC |
|---|---|
| (2) Location | 8-4-17, Ginza, Chuo-ku, Tokyo |
| (3) Title and name of the head | Representative: Kazumasa Watanabe |
| (4) Description of business | Investment development business and venture capital business |
| (5) Total investment | ¥4.5 billion |
| (6) Major shareholders and shareholding ratio | Recruit Holdings Co., Ltd. 100.00% |
4. Outline of transferring subsidiary (Hotspring Ventures Limited)
| (1) Name | Hotspring Ventures Limited | |||
|---|---|---|---|---|
| (2) Location | Threeways House, 40-44 Clipstone St., London | |||
| (3) Title and name of the head | CEO: Lopo Champalimaud | |||
| (4) Description of business | Operation of "Wahanda", an online reservation service in the beauty business in Europe | |||
| (5) Capital | ₤14,836.90 | |||
| (6) Foundation | February 14, 2008 | |||
| (7) Major shareholders and shareholding ratio | Europe Ventures LP：25.25% Panarea Capital, L.P.：10.86% Lepe Partners (Wahanda) LP：9.94% RGIP LLC：8.82% Lopo Champalimaud：7.80% |
|||
| (8) Relationships between the Company and Hotspring | Capital relationship | The Company holds 8.82% of the total outstanding shares of Hotspring through the Company's wholly owned corporate venture capital RGIP LLC. | ||
| Human relationship | There is no human relationship to be noted between the Company and Hotspring. In addition, there are no human relationships to be noted between persons associated with the Company or the Company's affiliates and persons associated with Hotspring or Hotspring's affiliates. | |||
| Business relationship | There is no business relationship to be noted between the Company and Hotspring. In addition, there are no business relationships to be noted between persons associated with the Company or the Company's affiliates and persons associated with Hotspring or Hotspring's associates. | |||
| (9) Consolidated financial results and consolidated financial position of the company for the past three years | Fiscal year | Year ended December 31, 2012 | Year ended December 31, 2013 | Year ended December 31, 2014 |
| Consolidated net assets | ₤(243) thousand | ₤2,858 thousand | ₤8,872 thousand | |
| Consolidated total assets | ₤2,253 thousand | ₤5,525 thousand | ₤12,333 thousand | |
| Consolidated net assets per share | ₤(32.86) | ₤259.31 | ₤6.04 | |
| Consolidated net sales | ₤2,060 thousand | ₤2,874 thousand | ₤4,309 thousand | |
| Consolidated operating income | ₤(2,572) thousand | ₤(2,496) thousand | ₤(6,435) thousand | |
| Consolidated EBITDA | ₤(2,487) thousand | ₤(2,404) thousand | ₤(6,309) thousand | |
| Consolidated net income | ₤(2,601) thousand | ₤(2,586) thousand | ₤(6,541) thousand | |
| Consolidated net income per share | ₤(352.23) | ₤(234.62) | ₤(4.45) | |
| Dividend per share | ₤0.00 | ₤0.00 | ₤0.00 | |
(Note)
The financial data for the year ended December 31, 2014 is unaudited.
5. Outline of major sellers of the shares
(1) Europe Ventures LP
| (1) Name | Europe Ventures LP | |
|---|---|---|
| (2) Location | Pembroke Hall, 42 Crow Lane, Pembroke HM 19, Bermuda | |
| (3) Reason for foundation, etc. | Law of the Bermuda | |
| (4) Purpose | Venture capital investments | |
| (5) Establishment | July 28, 2009 | |
| (6) Total investment | ₤100 million | |
| (7) Investor, investment ratio, and overview of investor | Not disclosed due to confidentiality obligation agreement | |
| (8) Overview of general partner | Name | Europe Partners LP |
| Location | Bermuda | |
| Title and name of the head | FIL Capital Management Ltd acts as the General Partner of Europe Partners LPThe Board of FIL Capital Management Ltd is:Christopher Brealey; Edmund Wrigley; Allan Pelvang and Neal Turchiaro with Deborah Speight as Alternate Director to all directors | |
| Description of business | Venture capital investments | |
| Capital | Not disclosed due to confidentiality obligation agreement | |
| (9) Overview of local agent in Japan | Not applicable. | |
| (10) Relationships between the Company and Europe Ventures LP | Relationships between the Company and Europe Ventures LP | The Company, persons associated with the Company or the Company's affiliates have neither directly nor indirectly invested in Europe Ventures LP. There is no capital, human, and business relationship to be noted between the Company, persons associated with the Company or the Company's affiliates and the investors of Europe Ventures LP. |
| Relationship between the Company and the general partner | There is no capital, human, and business relationship to be noted between the Company, persons associated with the Company or the Company's affiliates and the general partner of Europe Ventures LP, persons associated with the general partner of Europe Ventures LP or affiliates of the general partner of Europe Ventures LP. | |
| Relationship between the Company and the local agent in Japan | Not applicable. | |
(2) Panarea Capital, L.P.
| (1) Name | Panarea Capital, L.P. | |
|---|---|---|
| (2) Location | 810 Seventh Avenue, New York, NY 10019 | |
| (3) Reason for foundation, etc. | Law of The United States of America | |
| (4) Purpose | Investment in early stage private companies | |
| (5) Establishment | September 8, 2010 | |
| (6) Total investment | $50 - 100 million | |
| (7) Investor, investment ratio, and overview of investor | Not disclosed due to confidentiality obligation agreement | |
| (8) Overview of general partner | Name | Panarea Capital, L.P. |
| Location | 810 Seventh Avenue, New York, NY 10019 | |
| Title and name of the head | Alejandro Zubillaga, Managing Partner | |
| Description of business | Investment in early stage private companies | |
| Capital | Not disclosed due to confidentiality obligation agreement | |
| (9) Overview of local agent in Japan | Not applicable. | |
| (10) Relationships between the Company and Panarea Capital, L.P. | Relationship between the Company and Panarea Capital L.P. | The Company, persons associated with the Company or the Company's affiliates have neither directly nor indirectly invested in Panarea Capital L.P. There is no capital, human, and business relationship to be noted between the Company, persons associated with the Company or the Company's affiliates and the investors of Panarea Capital L.P.. |
| Relationship between the Company and the general partner | There is no capital, human, and business relationship to be noted between the Company, persons associated with the Company or the Company's affiliates and the general partner of Panarea Capital, L.P., persons associated with the general partner of Panarea Capital, L.P. or affiliates of the general partner of Panarea Capital, L.P. | |
| Relationship between the Company and the local agent in Japan | Not applicable. | |
(3) Lepe Partners (Wahanda) LP
| (1) Name | Lepe Partners (Wahanda) LP | |
|---|---|---|
| (2) Location | Cayman Islands | |
| (3) Reason for foundation, etc. | Law of the Cayman Islands | |
| (4) Purpose | Investments | |
| (5) Establishment | December 2, 2013 | |
| (6) Total investment | ₤ 3,481,873 | |
| (7) Investor, investment ratio, and overview of investor | Cayman Islands | |
| (8) Overview of general partner | Name | Lepe Partners (2013) GP |
| Location | Cayman Islands | |
| Title and name of the head | Directors: David Egglishaw, Gavin Davis and Tara Haig | |
| Description of business | Investments | |
| Capital | Not disclosed due to confidentiality obligation agreement | |
| (9) Overview of local agent in Japan | Not applicable. | |
| (10) Relationship between the Company and Lepe Partners (Wahanda) LP | Relationship between the Company and Lepe Partners (Wahanda) LP | The Company, persons associated with the Company or the Company's affiliates have neither directly nor indirectly invested in Lepe Partners (Wahanda) LP. There is no capital, human, and business relationship to be noted between the Company, persons associated with the Company or the Company's affiliates and the investors of Lepe Partners (Wahanda) LP. |
| Relationship between the Company and the general partner | There is no capital, human, and business relationship to be noted between the Company, persons associated with the Company or the Company's affiliates and the general partner of Lepe Partners (Wahanda) LP, persons associated with the general partner of Lepe Partners (Wahanda) LP or affiliates of the general partner of Lepe Partners (Wahanda) LP. | |
| Relationship between the Company and the local agent in Japan | Not applicable. | |
(4) Lopo Champalimaud
| (1) Name | Lopo Champalimaud |
|---|---|
| (2) Address | London |
| (3) Relationships between the Company and Lopo Champalimaud | Not applicable. |
6. Number of shares to be acquired, acquisition cost, and shares held before and after the acquisition
| (1) Number of shares held before the transfer | 138,989 shares (Number of voting rights: 138,989, ownership percentage: 8.82%) |
|---|---|
| (2) Number of shares to be acquired | 1,436,836 shares (Number of voting rights: 1,436,836) |
| (3) Acquisition price | Shares, etc. of Hotspring ₤112.5 million (approximately ¥20.4 billion) |
| Advisory fees, etc. (estimated amount) ¥0.6 billion | |
| Total (estimated amount) ¥21.0 billion | |
| (4) Number of shares held after the transfer | 1,575,825 shares (Number of voting rights: 1,575,825, ownership percentage: 100.00%) |
(Notes)
Number of shares to be acquired includes the total amount of shares of common stock and classified stock, etc. of Hotspring to be acquired by the Company's group.
"Shares, etc. of Hotspring Ventures Limited" under acquisition price includes the sum of the respective consideration for common stock and classified stock, etc. of Hotspring to be acquired by the Company's group.
The sum of consideration for common stock and classified stock, etc. of Hotspring converted at ¥181.55 to 1 pound and estimated amount of advisory fees, etc. is listed as total acquisition cost (estimated amount).
7. Schedule
| (1) Date of decision | May 1, 2015 |
|---|---|
| (2) Date of agreement | May 1, 2015 |
| (3) Date of execution of share acquisition | May 1, 2015 |
8. Future forecasts
The impact of the acquisition of shares on the consolidated financial results of the Company for the year ending March 31, 2016 is currently under review.
Acquisition of Hotspring - Online Beauty Reservation Service Provider in Europe - (635 KB)