Private equity firm ACA Group has agreed to buy a majority stake in Japan-based, corporate-backed cryptocurrency exchange BitFlyer for an amount expected to be up to $370m, Nikkei reported on Saturday.
Founded in 2014, BitFlyer operates a digital exchange for cryptocurrencies such as Bitcoin, Ethereum and Litecoin.
A group of the company’s shareholders led the sale negotiations in order to recoup their investments as the Tokyo Stock Exchange has banned public listings for digital currency exchanges and floating on an overseas market was expected to take too long, according to Nikkei.
The shareholder group was backed by BitFlyer co-founder Minefumi Komiyama and construction firm Sekisui House, each of which holds about 13% of its shares. The stake is reportedly sized at just over 50% and the other selling investors have not been named.
The rising costs of compliance and stricter regulations are seen as driving factors for operators leaving the space, Nikkei said.
BitFlyer’s founder and chief executive, Yuzo Kano, had been independently negotiating with potential buyers at a valuation of ¥100bn ($814m), but potential agreements with crypto exchange operator Huobi and online marketplace Mercari have failed to reach terms.
Insurer Dai-ichi Life and financial services firms Mizuho Financial Group and Sumitomo Mitsui Financial Group supplied $1.8m for the company in 2017, the last two through Mizuho Capital and SMBC Venture Capital, increasing its total funding to $36.7m.
Financial services provider SBI Group’s corporate venturing arm, SBI Investment, has taken part in a $27m series C round for BitFlyer in 2016 alongside Venture Labo Investment.
The company had raised $4m the previous year from marketing group Dentsu, media company Quick, insurance provider Mitsui Sumitomo Insurance and financial services firm Mitsubishi UFJ’s corporate venturing arm, Mitsubishi UFJ Capital, as well as Venture Labo Investment.
Existing BitFlyer investors also include human resources firm Recruit (through Recruit Strategic Partners), internet company GMO Internet Group (through GMO Venture Partners), Bitcoin Opportunity Corp, Incubate Fund, Digital Currency Group and East Ventures.
