Japan's $3.5 Billion Golf Company

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Hey Golfers -

A few weeks ago, the Golf Industry saw a $3.5 billion acquisition. New York-based Fortress Investment Group purchased Japanese-based Accordia Golf. Fortress Investment Group is a wholly-owned subsidiary of Softbank.

Softbank acquired Fortress Investment Group in December of 2017 for $3.3 billion; Fortress currently has $54 billion in Assets Under Management. Softbank is a Japanese-based investment conglomerate led by Masayoshi Son.

Softbank has made notable investments:

• Uber

• WeWork

• Fanatics

• Whoop

• Slack

Softbank is one of the best investment organizations in the world; it’s significant they are investing in golf.

Accordia Golf commenced its golf operation in 2002. They have an interesting history, which included an investment by Goldman Sachs. Accordia Golf owns Narashino Country Club, host of the 2021 Zozo Championship.

Here is a quick rundown on Accordia Golf:

• Own & operate 169 golf courses in Japan

• Own 22 driving ranges in Japan

• Own 7.6% of golf courses in Japan

MBK Private Equity acquired Accordia Golf in 2017 for $760 million. Accordia Golf selling for $3.5 billion just four years later is a massive validation for the golf industry - from a growth and global standpoint.

According to a report from the R&A, Japan had the second-most golf courses in the world at the end of 2018 with 3,169. Below is a look at the top 10 countries.

Japan has four golf courses in the Golf Digest Top 100

• Naruo Golf Club

• Tokyo Golf Club

• Kawana

• Hirono Golf Club

Japan has seen a steady demand for golf over the recent years; however, demand is down considerably from prior decades. Japan had ~15 million active golfers in the early 90s. In 2020, Japan was estimated to have ~9 million active golfers.

Here is a breakdown of the last five years for active golfers in Japan.

Golf in Japan is most popular with older generations, and Japan has the world’s largest aging economy, a concern for investors that did due diligence on Accordia Golf. There is a thought that Hideki Matsuyama winning the 2021 Masters invigorated the younger generations in Japan, which pushed the acquisition through, remarkable.

Fortress Investment Group operates Mystays Hotel Management and has 159 hotels in Japan. Fortress sees Mystays and Accordia as complementary products that have common synergies. They will likely market Mystays and Accordia as a bundle package to tourists going forward.

Accordia Golf is similar to United States organizations:

• ClubCorp

• Troon Golf

• Arcis Golf

ClubCorp once traded on the New York Stock Exchange. In 2017, Apollo Global Management, a private equity firm, purchased ClubCorp for $1.1 billion. ClubCorp owns and operates around 200 golf courses around the world. All things are not equal, but you would have to imagine Apollo is paying close attention to the Accordia Golf acquisition and valuation.

Troon Golf recently announced an investment from TPG and Symphony Ventures, Rory McIlroy’s investment firm. While Troon Golf is more focused on managing golf courses, they own or lease over 50 golf courses. Interestingly, Troon and Accordia both announced investment deals around the same time.

Arcis Golf owns and operates 70 golf courses in the United States. Arcis has been aggressively adding to its portfolio. Most notably, Arcis Golf acquired six Mickelson Golf properties in August of this year.

Golf continues to see strong growth in 2021. It is exciting to see the innovation and investment in the industry to aid the growth. It will be interesting to see if ClubCorp, Troon, and Arcis adjust their strategies after Accordia Golf’s recent announcement.

Have yourself a Monday, talk to you next week!

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