■Strengthening relationships with Hulic
1. Overview of Hulic's tender offer and third-party allotment of shares
On 2024/4/8, Riso Education ＜4714＞ expressed opinions in agreement with the tender offer by Hulic, which was a capital and business alliance, and announced a third-party allotment of shares with Hulic as the planned allotment. The number of shares to be tendered is 39,447,000 shares (320 yen per share), and the purchase period is scheduled from 4/9 to 5/22 of the same year, after which a third-party allotment of shares (15,596,000 shares, 218 yen per share) will be implemented. Eventually, Hulic's shareholding ratio rose from 20.6% at the end of the 2024/2 fiscal year to 51.0% and became the company's parent company, and the company aims for further business expansion as a Hulic Group while maintaining stock listing. Hulic, which develops the real estate business, has set the development of new business areas as a growth strategy, and will expand the education service business with the company as the core company.
The reason why the company's business did not become a wholly owned subsidiary this time is that the company's business targets households with children, and the merit of maintaining a stock listing for gaining recognition is great, and it is possible to recruit excellent human resources by utilizing name recognition and creditworthiness as a listed company from the viewpoint of human resource recruitment, and it was determined that maintaining stock listing contributes to improving corporate value.
A capital and business alliance was announced with Hulic in 2020/9, and they have been promoting new school attendance into real estate owned and developed by Hulic and the development of an education-specific building “Kodomo no Parto,” which is a joint project with Hulic and Konami Sports, but with this capital strengthening, we aim for further growth by actively carrying out capital investments, DX investments, M&A, etc. to expand existing businesses.
The funds raised through the capital increase are used for capital investments such as “Kodo Departo”, DX investments, M&A funds, etc.
2. Use of raised funds
This time, the main uses of funds raised through third-party allotment of shares (3,323 million yen in take-home amounts) can be broadly divided into 5 categories. Mainly, it is 1,291 million yen for equipment investment (security deposit, classroom equipment/equipment acquisition cost, initial investment cost) associated with the establishment of the new business “Kodomo Park”, and equipment investment funds (security deposit, interior work, design fees, initial investment costs, etc.) for creative culture education facilities (museums, libraries, etc.) established within “MITAKE Link Park (Shibuya) *” to be opened by Hulic Group in 2026, 710 million yen, DX strategy promotion costs (each group) It is planned to allocate 697 million yen for customer database integration costs, application development that serves as a point of contact with customers, classroom network maintenance costs, etc.), 200 million yen for security camera installation construction costs (all classrooms) at group companies, and 425 million yen as strategic M&A funds with business companies that contribute to strengthening and expanding existing businesses. Note, the capital investment fund for “Kodomo Depot” is the amount obtained by deducting 1,000 million yen already raised from the total capital investment amount of 2,291 million yen for 10 buildings (including those under consideration) expected to open by the spring of 2028.
* Hulic has been selected as the developer for the “Urban Renewal Step Up Project (Shibuya District) Shibuya-itchome Area Joint Development Project” implemented by Tokyo and Shibuya-ku, and is proceeding with the development of a complex building with 2 basement floors and 14 floors above ground (site area 9,670 square meters, total floor area 50,000 square meters). Offices, stores, rental housing, creative culture education facilities, multipurpose halls, etc. are planned to be built.
(Author: FISCO Visiting Analyst Joe Sato)