Taiwan/Taipei, April 25, 2016
XPEC Entertainment (3662) has announced its strategic alliance with Japan’s AltPlus Inc. Both parties have committed to making in-depth integration of business and cross-shareholding with regards to capital funding. This strategic alliance is historical since it’s the first time a Taiwanese game developer acquires the majority of a listed Japanese company’s shares.
The venture was approved this Friday (April 22) by XPEC’s board and the alliance signing ceremony was held at 9:30 AM at XPEC’s headquarters in Xindian by XPEC Chairman Chin-Lung Hsu and AltPlus CEO Takeshi Ishii.
AltPlus was founded in 2010 and promptly became a listed company on the Tokyo Exchange (3672) within 2 years. The company set the record for the shortest time to be listed after its foundation in the history of the Tokyo Exchange and that record has yet to be broken. As for capital alliance, XPEC will purchase AltPlus convertible bond at 855 million yen and convert the bonds at an appropriate time within 3 years. The price of AltPlus share for the past month had remained at 382 yen and compared to the closing price of 412 yen in Tokyo trading, the figure would be equivalent to a discount of 7.9%. If the bonds were to be converted in full, XPEC will have 19.9% stake (the largest share) in the Japanese company and a seat on the board.
On AltPlus’ part, the Japanese company will spend 646 million yen to acquire 1.12% stake of XPEC (1,656,367 shares) from the company’s private equity investor Eminent Global Limited before the following January. The price of XPEC’s shares is calculated based on the highest point taken on several days prior to the signing of the agreement (1 day, 10 days, 20 days and 30 days) at NT$ 144 per share. According to XPEC, the private equity shares issued three years ago will be ready for public offering in the 2nd half of the year and in order to relief the company’s selling pressure, XPEC will be looking for new strategic partners and bolster the company’s shareholder lineup.
In terms of business collaboration, AltPlus has published a number of games in Japan on SNS platforms such as Gree and MOBAGE, including the popular title Bahamut Brave (winner of numerous GREE platform awards and the best RPG award). AltPlus is also in close relationship with other major Japanese game developers and has published several popular IP mobile games including Saint Seiya Ultimate Wars, Emperors SaGa (SQEX), Super Sentai Power Rangers and so forth. With this alliance, XPEC will have more control of Japanese IP and opportunities for more collaborative development in the future. In addition, AltPlus also has an exceptional IT team based in Vietnam responsible for game operation and maintenance and XPEC will also be seeking more business opportunities with the new partner in Vietnam. AltPlus has promised to refer all art production related operations for its future titles to XPEC Art Center and all Japanese mobile game IPs that belong to the company to be operated by Xiamen Tongbutui in order to expand its Chinese market whilst XPEC will oversee relevant operations in Taiwan, Hong Kong and Macau.
According to XPEC Chairman Chin-Lung Hsu, AltPlus’ fundraising campaign has caught the attention of several Japanese and Chinese game companies. In fact, the Chinese companies were willing to overlook factors such as price and percentage of share, just to have an opportunity to become a part of a listed Japanese company. But ultimately, what made XPEC stand out from its competitors in the end was the company’s performance and reputation in the Japanese market over the years; the fact that he and AltPlus’s CEO Takeshi Ishii were old acquaintances probably contributed to XPEC’s alliance with AltPlus.
Due to the staggering costs of overseas market expansion AltPlus is currently at the bottom of its operation but is expected to see improvement. Hsu also noted that XPEC opted for convertible bonds as the company’s investment approach was to remain in the strategic position to go either defense or offense in terms of leveraging risks and a means to maximize the positive impact this transaction has on XPEC’s finances. XPEC is looking to gradually convert AltPlus’ corporate bonds when the Japanese company’s operations swings back into profit. The venture has also enabled XPEC to further integrate relevant resources in Taiwan, China and Japan by consolidating the company’s overall competitiveness in IP, development, operation and channel management.