Target Information

Advantage Advisors Co., Ltd. (hereinafter referred to as "the Company") has announced that its fund, AA Fund, will invest in a special purpose vehicle (SPV) that will subscribe to convertible bonds and stock acquisition rights issued by Koshidaka Holdings Co., Ltd. (hereinafter referred to as "Koshidaka HD"). Additionally, the Company will enter into a business partnership with Koshidaka HD to support advanced talent acquisition, the establishment of an organizational structure conducive to sustainable growth, the creation of innovative customer experiences that integrate real and digital entertainment beyond traditional karaoke, and the development of new business models pursuing "Welltainment" that balances entertainment and wellness.

Industry Overview in Japan

The Koshidaka HD Group primarily operates in the karaoke and bathing sectors. In its karaoke business, the company runs brands such as "Karaoke Manekineko" and the solo karaoke specialty store "Wan Kara" in Japan. Internationally, Koshidaka HD operates karaoke boxes in Malaysia, Thailand, Indonesia, and South Korea, while also manufacturing and selling karaoke-related equipment mainly for group clients through its South Korean subsidiary. In the bathing sector, Koshidaka HD operates three facilities under the "Maneki no Yu" brand within Japan.

In response to the ongoing challenges posed by the COVID-19 pandemic, which has altered consumer behavior and led to operational restrictions like store closures and reduced hours, Koshidaka HD has focused on expanding its store network and increasing the number of karaoke rooms. The company has concentrated on providing diverse entertainment options and on talent acquisition and development as key components of its mid-term corporate vision, which aims to establish entertainment as an essential infrastructure.

To achieve this vision launched in September 2019, Koshidaka HD recognizes that active talent recruitment and a robust organizational framework are critical issues. Consequently, they have decided to engage in this business partnership with Advantage Advisors to facilitate multifaceted growth support, in addition to raising funds.

Rationale Behind the Deal

The investment and partnership with Koshidaka HD represent a strategic alignment that aims to enhance the value of a leading company in the karaoke industry. The collaboration will focus on understanding consumer behavior changes and creating truly desired entertainment experiences. Key strategies will include active recruitment of talented individuals and the establishment of a sustainable growth-oriented organization. Additionally, there will be an emphasis on creating a seamless entertainment experience that transcends traditional physical and digital constraints.

About the Investor

Advantage Advisors Co., Ltd. specializes in providing investment and business support to companies seeking to enhance their value in various industries. With a strong focus on facilitating growth through strategic partnerships and investments, Advantage Advisors is well-equipped to provide Koshidaka HD with the necessary resources for achieving its mid-term corporate vision. The Company’s expertise lies in identifying market trends and supporting companies to adapt and innovate in evolving markets.

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This investment partnership is a prudent move considering Koshidaka HD’s established market presence and its proactive strategy to adapt to changing consumer preferences. Given the competitive landscape of the entertainment sector in Japan, where both physical and digital experiences are increasingly integrated, the risk of this investment appears manageable.

The emphasis on "Welltainment" is particularly timely, as consumers are increasingly prioritizing wellness alongside entertainment. By investing in a partnership that seeks to enhance customer experience through innovative offerings, Koshidaka HD stands to differentiate itself in a crowded market.

The active recruitment of top talent signals a commitment to developing a highly-skilled workforce, which is vital for maintaining competitiveness in the entertainment industry. Moreover, leveraging digital marketing and expanding store development capabilities are strategic moves that could enable Koshidaka HD to reinforce its market leadership.

Overall, this deal could prove to be an excellent investment for both Advantage Advisors and Koshidaka HD, paving the way for sustainable growth in a transformative industry.

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