Digital Garage Reinforces Capital and Business Alliance with Resona Group

Digital Garage (TSE Prime section: 4819) and Resona Holdings (TSE Prime section: 8308) agreed to reinforce the capital and business alliance formed in November 2022. In addition to strengthening their partnership in the payment business and next-generation Fintech business, the two companies will also begin collaboration in the startup investment and open innovation businesses.

In accordance with the reinforcement of the alliance, Resona HD plans to acquire an additional 10% of DG’s shares through a third-party allocation of treasury stock and market purchases of DG stock.

DG and Resona HD formed a capital and business alliance in November 2022 and consistently expanded their collaboration centered on payment business. Combining their business resources though this alliance, DG and Resona HD plan to contribute to building a convenient, safe, and secure cashless society by strengthening and expanding respective market share of their payment business and accelerating next-generation Fintech businesses, which both companies have set as key businesses focus within their Medium-term Plan.

Payment Business

Providing payment services to Resona Group’s 500,000 corporate clients by building a joint sales force centered on Resona Kessai Service.

• DG acquires stake in Resona Kessai Service (Resona HD’s payment services subsidiary) and operates RKS as DG’s equity method associate
• Provide DG’s advanced payment services to RKS and seconding and accepting employees to strengthen sales and marketing
• Establish a joint sales team and structure to leverage Resona Group’s 800+ branches and 3,000 corporate business professionals

Next-Generation FinTech Business

Jointly develop next-generation FinTech services to meet diverse customer needs and offer them to customers of both companies.

• Provide financial solutions of Resona Group, including RKS, to DG’s merchants
• Jointly develop and provide payment, financial, and DX service solutions to customers of both companies, utilizing technology to meet diverse and high-level customer needs

Startup Investment and Open Innovation Business

Accelerate growth through joint operation of investment funds and utilize startups’ advanced technologies and business models.

• Jointly establish and operate a venture fund with a fund-size 10 billion yen or more and transfer a portion of DG’s operational investment securities to the fund
• Accelerate the growth of companies’ payment and next-generation Fintech businesses by leveraging startups’ cutting-edge technologies and business models

DG will use the proceed from the disposal of treasury stock for strategic M&A initiatives including partial acquisition of RKS, new business development initiatives on the next-generation Fintech business, and system enhancement initiatives to further enrich its payment system infrastructure. In addition, DG will develop a new business line, “Processing Platform Business,” that will focus on providing DG’s payment system infrastructure to external payment service providers. DG will support the expansion of the Japanese Fintech market by providing a payment system infrastructure that supports various companies to enter the payment business easily and efficiently.

This alliance will further enhance diversification of DG’s finance and DX service offerings, including finance, e-commerce and marketing business leveraging its purchasing data, to address various customer demand. DG will accelerate the diversification of its revenue models and expansion of profit margins in accordance with its group strategy, “DG FinTech Shift,” and aspire to achieve the Medium-term Plan announced in May 2023.

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