Fortress Investment Group, backed by SoftBank, plans to acquire Accordia Golf, which operates approximately 170 golf courses in Japan, under a $ 3.5 billion deal.
Accordia Golf, Japan’s largest golf course portfolio, was previously part of Goldman Sachs investments in the early 2000s before being listed in 2014. The company was bought by private equity group MBK for 760 million dollars in 2016.
The $ 3.5 billion deal includes approximately 232 billion yen in debt, according to the Financial Times. Fortress manages around $ 54 billion in assets, and there are reports that SoftBank is considering divesting its investment in the company.
Japan, where golf is a popular sport among the elderly, is experiencing a decline in popularity. Young people and corporate players stay away from the sport. Japan is the largest aging economy in the world, and Fortress hopes wealthy retirees will increasingly engage in sports.
The Japan Productivity Center, a nonprofit research group, estimated that 5.2 million people played golf in Japan at least once in 2020, down 10.3% from the previous year. Accordia estimates that its average customer plays 2.7 times per year and that 11.7 million spins have taken place in its portfolio in 2020.
Fortress manages a $ 54 billion portfolio. A person familiar with the deal told the Financial Times that Fortress was drawn to the deal: Accordia’s high cash generation, dominant market share, and high profitability of 1.5-2% of growth. annual turnover before Covid.
But some believe that MBK is putting too high a price on an unstable company. It is already known that MBK was in talks with six of the largest private equity groups in the world and that three have withdrawn from the deal. Fortress was the only company that came back to the table with an offer.
In the 1980s, when Japan was experiencing an economic peak, many golf courses were built. In 1991, Japan had 18 million golfers. Financial executives were copying their Wall Street counterparts. But over the years, they have suffered many misfortunes. Some have been converted to solar farms, and others have simply closed or been rented out for events. Accordia has already received inquiries from renewable energy and logistics companies regarding the possible use of part of the land surrounding it.
Under MBK, Accordia planned to expand. The company now offers 169 courses, or 7.6% of the total in Japan.
There is renewed interest in golf with 29-year-old Hideki Matsuyama becoming the first Japanese player to win the Masters, making him a cultural phenomenon. His victory won him praise from the Prime Minister, and this victory could have prompted Fortress to close the deal.
Fortress acquired hotel operator Mystays Hotel Management in 2012, capitalizing on Japan’s growing popularity as a tourist destination. It has 159 hotels and is looking for more as it prepares to take advantage of the wave of post-coved travel. Accordia said in a statement that Fortress hotels would be an added benefit to its gold business.