■Company overview of E Guaranty <8771>

1. Company History WaveLock Holdings <7940> originated from Japan WaveLock Co., Ltd., which was established in 1964 with equal investment from Nissho Co., Ltd. (currently Sojitz <2768>), Japan Carbide Industry <4064>, and Maruto Chemical Industry Co., Ltd. (currently Takeda Chemical Industries, Ltd.) for the introduction of the WaveLock technology regarding fiber-reinforced plastic sheet from Italy. The WaveLock method is a method of manufacturing a sandwich structure by synthesize fibers in a wave shape between two plastic films and fixing (lock) them. Resin processing sheets made by this method have the characteristics of not only elasticity but also a significant increase in physical strength. In the 1960s, vinyl products used in agriculture were weak in strength and susceptible to tearing, and the founder, Hiromi Kinebuchi, saw the need for WaveLock products in the same field and aimed to introduce the technology from agricultural raincoats. After that, the market expanded to include vinyl greenhouses, raincoats, industrial materials, and more, and the business grew. The operating income of products worth 10-30 billion yen were respectively 401/1288/60 million yen.

The company was founded by Masanori Eto, the current President and Representative Director, as a subsidiary of an internal company in September 2000, his third year at Itochu Corporation <8001>. Initially, the business was launched with the aim of providing a service to guarantee the unrecovered receivables (promissory notes, accounts receivable, etc.) in B2B business on the internet. However, due to lower demand than expected, it expanded to providing credit risk guarantee services for sales receivables in real inter-company transactions without using the internet.

In March 2007, the company achieved listing on the JASDAQ Securities Exchange, then moved to the Tokyo Stock Exchange (TSE) First Section in December 2012, and transitioned to the TSE Prime Market in April 2022 due to a market classification change. By securing funds through listing, the company established a fund to invest in corporate credit risks for the first time in 2008, starting operations through a subsidiary. Previously, the credit risks undertaken were segmented according to risk levels and all transferred to financial institutions for risk hedging. By forming new funds, the company diversified revenue opportunities and strengthened risk capacity, accelerating its growth. Currently, around 15% of the overall credit risk is entrusted to group companies (as of the end of August 2024, the fund union consists of 10 consolidated subsidiaries, 1 equity-method affiliate, and 1 non-consolidated equity-method affiliate).

In January 2012, the company absorbed know-how related to export credit guarantee to enhance its management foundation and strengthen product development. To achieve this, it acquired the factoring business of Coface Group's Japan branch (Coface Japan Finance Co., Ltd.), a major credit insurance company in France. Leveraging the expertise gained from this acquisition, the company started export credit guarantee services in South Korea in December 2013 and in China in June 2014 through business partnerships with local financial institutions. However, regarding overseas transactions (exports, investments, loans), many companies use trade insurance or international factoring services, resulting in a small proportion of sales.

To expand its business, in 2013 the company established E Guaranty Solution Corporation to handle internal system development and administrative tasks related to sales (contract-related tasks and data entry). In 2014, it established RG Guarantee Corporation specialized in small receivable guarantee services as a subsidiary. In addition, in 2017, operations-related administrative tasks were separated from E Guaranty Solution to establish E Guaranty Shared Services Corporation (now Easy Payment Corporation), and in 2019, E Guaranty Investment Corporation was established to invest in venture companies and acquire, hold, and operate securities.

(Written by FISCO guest analyst, Jo Sato)