Some of the biggest Japanese pachinko companies are looking at expanding their businesses outside of Japan, specifically eyeing foreign partnerships and listings on the Hong Kong Stock Exchange to initiate IPOs and offset the declining revenues in their home country.
Sources close to the Wall Street Journal told the daily that about four pachinko operators are looking at the stock exchange in Hong Kong to help generate more revenues. Koriyama-based Niraku Corp. has hired investment bank Shenyin Wanguo to help it raise around $75 million by the end of 2015 while the Palazzo Tokyo Plaza Group is eyeing a 2016 listing.
Dynam Japan Holdings Co. and Sega Sammy Holdings are considered two of the biggest pachinko firms in Japan. Both have already ventured into overseas business. The former listed on the Hong Kong Stock Exchange in August 2012 and invested $85 million in Macau casino operator Macau Legend Development. Once it receives government approval, Dynam plans to operate pachinko machines at one of Macau Legend’s casinos in Macau. Sega Sammy Holdings has also taken its act on the road as it recently broke ground on its casino resort in South Korea, a joint project with local casino operator Paradise Co.
The number of pachinko operators looking to venture outside of Japan could grow depending on how much interest small operators like Palazzo and Niraku generate via their IPOs.
Foreign firms have been leery about getting involved in an industry that’s been historically linked to organized crimes in Japan, a problem Dynam had to deal with when the stock exchange required it to submit documents proving it didn’t have any links to organized crime in Japan.