Singapore/Tokyo - 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.

Click Here