Target Company Overview

Advantage Partners (referred to as 'AP') has sold 10,858 shares of Net Protections Holdings, Inc. (referred to as 'Net Protections Holdings'), representing approximately 12.33% of the total shares outstanding on a fully diluted basis, to Ricoh Leasing Company, Limited (referred to as 'Ricoh Leasing', TSE 1st Section / Securities Code 8566). Net Protections Holdings, through its subsidiary Net Protections, has been providing B2C e-commerce deferred payment services since its establishment in 2002. Since AP's investment in July 2016, the company has utilized its networks and business improvement expertise to enhance operational capabilities. As a result, the annual active user base of Net Protections' primary service, 'NP After Payment', surpassed 13.5 million in FY2018, with a cumulative transaction volume reaching 170 million since the service's inception, solidifying its position as a key payment infrastructure in domestic e-commerce.

Industry Overview in Japan

The e-commerce payment sector in Japan has witnessed significant growth, driven by the rising trend of online shopping and changing consumer preferences towards flexible payment solutions. The e-commerce market has expanded rapidly, with consumers increasingly favoring deferred payment options that allow for purchase follow-up without immediate financial commitment. This shift has naturally aligned with technological advancements, enhancing the user experience in payment processing.

Japan's digital payment landscape is characterized by fierce competition among various service providers offering a plethora of payment options, including credit cards, mobile wallets, and deferred payment methods. This dynamic environment has necessitated innovation as companies strive to capture market share and cater to diverse consumer needs. As a result, players in this sector are continually adapting their strategies to leverage technological advancements and improve service efficiency.

The presence of major players and emerging fintech companies is also accelerating the transformation of the industry. Net Protections, with its robust offerings, plays an essential role in this ecosystem, addressing both consumer and merchant needs through its diverse deferred payment solutions tailored for e-commerce transactions.

Rationale Behind the Deal

AP's strategic partnership with Ricoh Leasing is aimed at enhancing the growth trajectory of the Net Protections Group, particularly in the B2B domain. The investment is expected to strengthen Net Protections' 'NP Akeharai' service by leveraging Ricoh Leasing's extensive network and expertise in financial services. This service extends the operational capabilities of Net Protections' existing B2C deferred payment solutions into the B2B space, significantly simplifying inter-business transactions while minimizing collection risks.

Investor Information

Ricoh Leasing is recognized as a prominent player in the leasing and installment sales sectors, boasting a network of approximately 400,000 clients, predominantly small and medium-sized enterprises, and communication with around 6,000 vendors. The company focuses on providing leasing solutions and financial services tailored to meet the diverse needs of its clients. By collaborating with Net Protections, Ricoh Leasing aims to create a comprehensive platform that merges payment services with its financial offerings, catering to the growing financial needs of SMEs in Japan.

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This strategic investment represents a potential win-win situation for both Net Protections and Ricoh Leasing. By leveraging each other's strengths, the two companies can create an integrated solution for businesses seeking reliable payment options. The partnership is likely to foster innovation and accelerate growth in the B2B sector, an area that has immense potential yet remains under-exploited.

The projected growth of the B2B deferred payment services should provide Net Protections with a substantial new revenue stream. The firm has proven itself as a formidable player in the B2C market; therefore, this expansion into B2B aligns perfectly with their existing business strategy and operational model.

However, the success of this venture will depend on the execution of an effective integration strategy and the ability to harness complementary capabilities. Should they effectively combine Net Protections' innovative payment solutions with Ricoh Leasing’s extensive clientele, this partnership could emerge as a leader in both the B2C and B2B markets.

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