Entering global relocation with BGRS, and exiting five years later (2019)

The assets it bought, and the time it could not buy

What this investment bought was fourteen locations across eight countries and a customer list including Fortune Global 500 companies. Judged by the way the group had built up company-housing management and benefits at home, extending the same event — the transfer — downstream and overseas is a coherent choice. But whereas the domestic businesses stood on monthly accumulation of membership fees and managed units, the acquired company’s revenue was flow-based, tied to the number of transfers occurring and to home sales. The reasons the CFO gave at the time of exit were exactly these: vulnerability to a pandemic, and dependence on flow revenue.

Looking at the breakdown of the impairment, what was lost was not only the ¥25.5bn purchase price. The ¥10.0bn of receivables and ¥9.9bn of loans that accumulated after the combination fall alongside ¥27.6bn of preferred shares. That the group diluted its equity holding to 23% while remaining a creditor pushed the total loss to nearly twice the acquisition amount. It wrote off ¥47.6bn in the year to March 2024, and closed the following year with net profit of ¥43.3bn on a ¥18.7bn gain from selling its Nihon Housing shares. What filled the hole opened abroad was a domestic stake it had held since 2009.