June 9, 2015
Company Name:

GMO Internet, Inc.
(TSE First Section, Code: 9449)

Address:

26-1 Sakuragaoka-cho Shibuya-ku Tokyo JAPAN

Representative:

Masatoshi Kumagai, CEO and FounderContact:

Masashi Yasuda, Chief Financial Officer

Telephone:+81 3 5456 2555

URL:

https://www.gmo.jp/en

Notification of Business and Capital Relationship with Sumitomo Mitsui in Payment
Business, and Capital Increase through Private Placement in Consolidated Subsidiary,
GMO Payment Gateway
The GMO Internet Inc. board of directors today convened a meeting in which the following was resolved;
i. To execute a four-party business and capital partnership agreement (“the Agreement”) with consolidated
subsidiary GMO Payment Gateway, Inc. (TSE:3769), Sumitomo Mitsui Financial Group and Sumitomo Mitsui
Banking Corporation, under which GMO Payment Gateway and Sumitomo Mitsui Banking Corporation will
establish a joint venture payment business company.
ii. To subscribe to shares issued by GMO Payment Gateway in a capital increase through private placement.
For further details regarding the partnership, please refer to the GMO Payment Gateway, disclosure of today,
Notice of Capital and Business Partnership and Private Placement of New Shares (attached).

1．Objectives of the Partnership and Capital Increase through Private Placement(1) GMO Payment Gateway shared vision, and business and capital relationship
Under the corporate tagline, Internet for Everyone GMO Internet Group focuses resources on high-growthareas in the Internet market.
In the Group’s Internet Infrastructure business segment, GMO Payment Gateway operates online credit card
payment and other payment services. Since becoming a public company, GMO Payment Gateway has
continued to grow revenue and profits as the ecommerce and credit card markets have expanded. Goingforward, the company expects to see sustained growth in the mid-to-long term as expansion of the market
remains strong. However, the company also recognizes that it must take measures to seize growth
opportunities at a deeper level in the domestic market and to maximize opportunities in the global market.
Specifically, GMO Payment Gateway believes that it is important to diversify payment business opportunities1

by bringing together finance technology and Internet technology, and to broaden relationships withlarge-scale businesses in order to drive ecommerce penetration (a representation of ecommerce transactions
as a percentage of all retail transactions) in Japan, a rate that is expected to reach 10% in the not-to-distantfuture.
Further, in the global market it is critical that the company respond to the global expansion of European andNorth American financial and payment companies. It can be expected that European and North American
financial and payment companies will enter the Asian market, an important global growth center, intensifying
competition. In light of this trend, the company believes it is necessary to partner with a financial institution
and build a firm relationship ahead of its competitors.
GMO Payment Gateway sought a business partner that would be a strong partner for a payment business,with a clear understanding of the company’s business operations and future vision as well as a common
outlook. It was decided to form a business and capital partnership with Sumitomo Mitsui Banking Corporation,
a company with a strong business platform and customer base both domestically and globally.
The companies’ respective parent companies GMO Internet and Sumitomo Mitsui Finance Group will also
participate in the business and capital partnership. The parent companies bring to the partnership broadbusiness networks, and will enhance operations, contributing to future expansion of the business partnership.
The four companies aim to build a long term partnership that GMO Payment Gateway considers willcontribute to future business growth and shareholder value.
(2) GMO Internet initiatives under the business and capital partnership
Under the corporate tagline, Internet for Everyone GMO Internet Group focuses resources on high-growthareas in the Internet market. For GMO Internet Group, GMO Payment Gateway online credit card payment
processing services are positioned as a key growth area. Enhancing the relationship between GMO Internet
and GMO Payment Gateway, members of the GMO Internet board serve as external directors on the GMO
Payment Gateway board, and Issei Ainoura, Chief Executive Officer of GMO Payment Gateway, serves as anexternal director on the GMO Internet board, and the two companies have a close cooperative partnership.
GMO Internet considers that subscribing to new shares issued in the private placement will strengthen thefinancial position of GMO Payment Gateway and contribute to further growth of its payment services business,and impact consolidated earnings. GMO Internet held discussions with Sumitomo Mitsui Banking Corporationin regard to joint participation in the subscription. GMO Internet expects the partnership to bring about further
growth in payment services, enhancing synergies throughout the GMO Internet Group Internet Infrastructurebusiness segment and contributing to GMO Internet consolidated earnings. For this reasons it was resolved
to participate in the private placement on an equal level with Sumitomo Mitsui Banking Corporation and to
execute a four-party partnership with GMO Payment Gateway, Sumitomo Mitsui Financial Group andSumitomo Mitsui Banking Corporation.

2

2．Overview of GMO Payment Gateway, Inc. (as of March 31, 2015)
Com pan y

Nam e

GMO Payment Gateway, Inc.

Address

1-14-6 Dogenzaka, Shibuya-ku, Tokyo

CEO

Issei Ainoura

Business Description

Credit card payment and other payment services and ancillary services.

Capital

JPY 710 million

Date EstablishedMarch 1995

Major Shareholders and
GMO Internet, Inc. 51.66%
Ownership Ratio
GMO Internet holds 17,849,600 common
Capitalshares (51.66% of voting rights) in GMO
Payment Gateway
Two members of the GMO Internet board of
directors serve concurrently on the GMO

Reportable Related Party

Executive

Payment Gateway board of directors, and one
GMO Internet board member serves on the GO

Relationships

Payment Gateway board of auditors.
Annual transactions of JPY108,843,000
Transactional(FYE12/2015) in payment services.
Related Party

GMO Payment Gateway is a consolidated

Relationships

subsidiary of GMO Internet.

Operating Results and Financial Condition in the Three most Recent Fiscal Terms
Fiscal TermNet

FYE 9/2012

FYE 9/2013

FYE 9/2014

AssetsJPY 4,972 millions

JPY 5,633

JPY 6,815

Total Assets

JPY 14,834 millions

JPY 21,298 millions

JPY 24,613 millions

JPY 144.24

JPY 163.12

JPY 197.15

Net Sales

JPY 4,708 millions

JPY 5,764 millions

JPY 7,205 millions

Operating Profit

JPY 1,753 millions

JPY 2,048 millions

JPY 2,476 millions

Ordinary Profit

JPY 1,764 millions

JPY 2,047 millions

JPY 2,527 millions

JPY 960 millions

JPY 1,217 millions

JPY 1,515 millions

Net Profit per ShareJPY 28.01

JPY 35.38

JPY 43.92

Dividend per Share

JPY 19.5

JPY 24.5

JPY 30.0

Net

Assets per Share

Net Profit

33．Overview of the Capital Increase through Private Placement
Sumitomo Mitsui Banking Corporation and GMO Internet will subscribe to new shares issued by GMO
Payment Gateway in a capital increase through private placement. A summary of the share issue follows.

(1)
(2)
(3)
(4)

Payment Date
No. of New Shares
Issue Price
Total Capital to be
Raised(5)Method of allocation(Subscribers)

(6)

Other

June 25, 2015
2,587,300 common shares
JPY 3,092 per share
JPY 7,999,931,600
Private placement of new shares. 1,250,800 shares to beallocated to Sumitomo Mitsui Banking Corporation, 1,336,500
shares to be allocated to GMO Internet.
Under the Securities and Exchange Act, the above amount is
contingent on the filing of the Securities Registration
Statement.

4． Shareholding Position Before and After Capital Increase through Private Placement
Number of Shares
Prior toTransaction
After
Transaction

Ownership Ratio

Majority Shareholder

17,849,600

51.66％

No. 1

19,186,100

51.66％

No. 1* The ration of voting rights held by GMO Internet will remain at 51.66% after the transaction.

5．Schedule
Board of Directors approval of Business and Capital Partnership and Subscription to Capital Increase
through Private Placement: June 9, 2015
Agreements executed relating to the Business and Capital Partnership and Subscription to Capital
Increase through Private Placement: June 9, 2015
Payment Date (Capital Partnership): June 25, 2015 (tentative)

6．Outlook
GMO Internet considers that the partnership will contribute to building group, corporate and shareholder value;
however, at this time it is not yet known what impact the transaction will have on consolidated results for
FYE12/2015. Once the impact on results is clear, it will be promptly disclosed.

4June 9, 2015

Company Name:CEO:Contact:

GMO Payment Gateway, Inc.
Issei Ainoura(TSE: 3769)
Ryu Muramatsu, Vice President
TEL: +81-3-3464-0182

Notice of Capital and Business Partnership and Private Placement of New Shares
A meeting of the GMO Payment Gateway, Inc. Board of Directors convened today, agreed to form abusiness and capital partnership with GMO Internet, Inc, Sumitomo Mitsui Financial Group andSumitomo Mitsui Baking Corporation. At the same time, it was resolved to issue new shares to Sumitomo
Mitsui Banking Corporation and parent company GMO Internet, Inc.

I. Business and Capital Partnership
1.

Objective of the business and capital partnership
GMO Payment Gateway connects payment data between non-face-to-face businesses (merchants),
primarily BtoC ecommerce businesses and credit card companies, enabling merchants to operatecredit card and other payment options in an efficient manner. Since becoming a public company,
GMO Payment Gateway has continued to grow revenue and profits as the ecommerce and credit
card markets have expanded.
Going forward, the company expects to see sustained growth in the mid-to-long term as expansion of themarket remains strong. However, the company also recognizes that it must take measures to seize
growth opportunities at a deeper level in the domestic market and to maximize opportunities in the global
market.
Specifically, GMO Payment Gateway believes that it is important to diversify payment business
opportunities by bringing together finance technology and Internet technology, and to broaden
relationships with large-scale businesses in order to drive ecommerce penetration (a representation of
ecommerce transactions as a percentage of all retail transactions) in Japan, a rate that is expected toreach 10% in the not-to-distant future.
Further, in the global market it is critical that the company respond to the global expansion of European
and North American financial and payment companies. It can be expected that European and North
American financial and payment companies will enter the Asian market, an important global growth center,
intensifying competition. In light of this trend, the company believes it is necessary to partner with afinancial institution and build a firm relationship ahead of its competitors.
GMO Payment Gateway also provides early payment services to aid merchants in improving cash flow,transaction lending services that offer financing to merchants who operate BtoC ecommerce or othernon-face-to-face businesses with strong growth potential, and many merchants are implementing the
GMO Pay Later service, a payment method for which there is strong consumer demand. In order to growthese core financing services, the company believes it is necessary to increase working capital. Further,
given the credit risk associated with financing services, expanding these services will require GMO
Payment Gateway to strengthen shareholders’ equity in order to take on risk assets such as short-termloans and accounts receivable.

1

GMO Payment Gateway sought a business partner that would be a strong partner for a paymentbusiness, with a clear understanding of the company’s business operations and future vision as well as acommon outlook, and it was decided to form a business and capital partnership with Sumitomo Mitsui
Banking Corporation, a company with a strong business platform and customer base both domesticallyand globally.
The companies’ respective parent companies GMO Internet and Sumitomo Mitsui Finance Group will
also participate in the business and capital partnership. The parent companies bring to the partnership
broad business networks and will enhance operations, contributing to future expansion of the business
partnership. The four companies aim to build a long term partnership.
GMO Payment Gateway will execute a business and capital partnership agreement with Sumitomo Mitsui
Banking Corporation GMO Internet, and Sumitomo Mitsui Financial Group with the objective ofcontributing to future business growth and shareholder value.

2. Details of the Business and Capital Partnership(1) Details of the business partnership
An overview of the business partnership agreed to between GMO Internet and Sumitomo
Mitsui Banking Corporation to date is as follows.
i.

Establish a joint venture company that will provide credit card payment processing
services as GMO Payment Gateway currently provides.

ii.

Sumitomo Mitsui Banking Corporation customers to be introduced to the joint venture.

iii.

GMO Payment Gateway to provide payment processing system to the joint venture.

iv.

Both companies to provide staff

The two companies’ parent companies, GMO Internet and Sumitomo Mitsui Financial Group have agreed
to provide reasonable cooperation in order to support operation of the partnership. Details will beconsidered going forward.

(2) Details of the Capital Partnership
In a capital increase through private placement, GMO Payment Gateway will allocate
1,250,800 common shares to Sumitomo Mitsui Banking Corporation (% of voting rights after
placement 3.36%, % of total outstanding shares 3.36%), and 1,336,500 common shares to
GMO Internet (% of voting rights after placement 51.67%, % of total outstanding shares
51.67%).
For details of the capital partnership, please refer to II. Issue of New Shares in Private
Placement.

3. Overview of Partners in Capital Partnership (as of 3/31/2015)
Company Name
Address
CEO
Business Description
CapitalDate Established
No. of Outstanding SharesFiscal Term
No. of Employees
Major customers
Major banks
Significant Shareholders
and Ownership Ratio

Sumitomo Mitsui Financial Group1-1-2 Marunouchi, Chiyoda-ku, Tokyo
Koichi Miyata
Management of subsidiaries and ancillary business
JPY 2,337,895 million
12/2/2002
1,414,055,625
Year to March
68,739 (consolidated)－－Japan Trustee Services Bank Ltd. 4.71%
The Master Trust Bank of Japan Ltd. 4.19%

2

(as of 9/30/2014)

Sumitomo Mitsui Baking Corporation 3.02%
NATSCUMCO 2.08%
THE BANK OF NEW YORK MELLON SA/NV 10 1.94%
CapitalNone
Executive
None
Reportable Related Party
Relationships
Transactional
None
Related Party
None
Operating Results and Financial Condition in the Three Most Recent Fiscal Year (JPY millions)Fiscal Term
FYE3/2013
FYE3/2014
FYE3/2015
Consolidated Net Assets
8,443,218
9,005,019
10,696,271
Consolidated Total Assets
148,696,800
161,534,387
183,442,585
Consolidated Net Assets per
Share (JPY)
Consolidated Ordinary Revenue
Consolidated Ordinary Profit
Consolidated Net Profit
Consolidated Net Profit per
Share (JPY)Dividend per Share (JPY)

4,686.69

5,323.87

6,598.87

4,326,424
1,073,745
794,059

4,641,880
1,432,332
835,357

4,851,202
1,321,156753,610585.94611.45551.18120
120
140*GMO Payment Gateway assessed the Sumitomo Mitsui Financial Group policy on organizedcrime stated in the corporate governance report submitted by the company to the Tokyo Stock
Exchange, and reviewed its practices using the Tokyo Stock Exchange website. It was determinedthat none of its board members or major shareholders have ties with organized crime.
Company Name
Address
CEO
Business Description
CapitalDate Established
No. of Outstanding
Shares(as of 9/30/2014)

Fiscal Term
No. of Employees(as of 9/30/2014)

Major customers
Major banks
Significant Shareholders
and Ownership Ratio

Sumitomo Mitsui Banking Corporation
1-1-2 Marunouchi, Chiyoda-ku, Tokyo
Takeshi Kunibe
Banking, securities, leases and other businesses
JPY 1,770,996 million
June 6, 1996
Common Shares 106,248,000
Preferred Shares 70,000
March
50,319 (consolidated)－－
Sumitomo Mitsui Financial Group100%

CapitalExecutive

None
None
GMO Payment Gateway has an overdraft
Reportable Related Party
contract with Sumitomo Mitsui Banking
Relationships
Transactional
Corporation but does not currently havebalance outstanding.
Related Party
None
Operating Results and Financial Condition in the Three Most Recent Fiscal Year (JPY millions)Fiscal Term
FYE3/2013
FYE3/2014
FYE3/2015
Consolidated Net Assets
7,276,706
8,257,091
8,640,763
Consolidated Total Assets
138,251,602
143,203,127
155,824,141
Consolidated Net Assets per
Share (JPY)
Consolidated Ordinary Revenue
Consolidated Ordinary Profit
Consolidated Net Profit
Consolidated Net Profit per
Share (JPY)Dividend per Share (JPY)53,960.98

64,031.58

71,465.80

2,687,911
857,919533,816

2,810,681
928,713734,5143,150,992
1,298,738
785,687

5,024.23

6,913.18

7,394.82

1,485
1,689
4,325
*Sumitomo Mitsui Banking Corporation is a wholly-owned subsidiary of Sumitomo Mitsui Financial
Group. GMO Payment Gateway assessed the Sumitomo Mitsui Financial Group (the parent

3company) policy on organized crime stated in the corporate governance report submitted by thecompany to the Tokyo Stock Exchange, and reviewed its practices using the Tokyo Stock
Exchange website. It was determined that the company has in place systems to prevent it forming
relationships with organized crime and that Sumitomo Mitsui Banking Corporation has no ties toorganized crime. This was reported to the Tokyo Stock Exchange.

Company Name
Address
CEO
Business Description
CapitalDate Established
No. of Outstanding
Shares

GMO Internet, Inc.
26-1 Sakuragaokacho, Shibuya-ku, Tokyo
Masatoshi KumagaiInternet Infrastructure, Online Advertising & Media, Internet Securities,
Mobile Entertainment, Incubation
JPY 5,000 million
May 1991
117,806,777(as of 9/30/2014)

Fiscal Term
No. of Employees
Major customers

Year to December
3,462 (consolidated as of March 31, 2015)
Consumer, general business customers
Sumitomo Mitsui Banking Corporation
Aozora Bank
Major banks
The Bank of Tokyo Mitsubishi UFJ
Mitsubishi UFJ Trust and Banking Corporation
Mizuho Bank
Significant Shareholders
Masatoshi Kumagai Office Ltd. 29.30%, Masatoshi Kumagai 15.31%,
and Ownership Ratio
THE CHASE MANHATTAN BANK 385036 4.85%
GMO Internet holds 51.66% of GMO Payment
Gateway outstanding shares, and is the
Capitalcompany’s largest shareholder and parent
company.
Two members of the GMO Internet Board of
Directors and serves concurrently on the GMO
Payment Gateway Board of Directors and one
Executive
Reportable Related Party
member of the GMO Internet Board of Directors
Relationships
serves concurrently on the GMO Payment
Gateway Board of Auditors.
Annual transactions of JPY117,114,000
Transactional(FYE12/2015) in payment services.
GMO Internet is the parent company of GMO
Related Party
Payment Gateway. No other reportable related
party relationships.
Operating Results and Financial Condition in the Three Most Recent Fiscal Year (JPY millions)Fiscal Term
FYE3/2013
FYE3/2014
FYE3/2015
Consolidated Net Assets
30,41836,88443,876
Consolidated Total Assets
275,960
429,762
483,367
Consolidated Net Assets per
Share (JPY)
Consolidated Ordinary Revenue
Consolidated Ordinary Profit
Consolidated Net Profit
Consolidated Net Profit per
Share (JPY)Dividend per Share (JPY)Fiscal Term

178.86212.12248.1474,376
9,149
9,175

93,704
11,00010,941

109,368
12,931
12,734

4,518

5,244

5,841

38.35
44.51
49.58
13
15
17
*GMO Payment Gateway assessed the GMO Internet policy on organized crime stated in thecorporate governance report submitted by the company to the Tokyo Stock Exchange, andreviewed its practices using the Tokyo Stock Exchange. It was determined that none of its board
members or major shareholders have ties with organized crime.

44. Schedule(1) GMO Payment Gateway Board of Directors approval of Business and Capital Partnership andCapital Increase through Private Placement: June 9, 2015
(2) Agreements executed relating to the Business and Capital Partnership and Capital Increase throughPrivate Placement: June 9, 2015(3) Opening of Business and Capital Partnership: June 9, 2015(4) Payment Date (Capital Partnership): June 25, 2015 (tentative)

5. Outlook
For details, please refer to II. Issue of New Shares in Private Placement. 8. Outlook

II．Issue of New Shares in Private Placement
１．Overview of Subscription
(1)
(2)
(3)
(4)

Payment Date
No. of New Shares
Issue Price
Total Capital to be
Raised(5)Method of allocation(Subscribers)

(6)

Other

June 25, 2015
2,587,300 common shares
JPY 3,092 per share
JPY 7,999,931,600
Private placement of new shares. 1,250,800 shares to beallocated to Sumitomo Mitsui Banking Corporation, 1,336,500
shares to be allocated to GMO Internet.
Under the Securities and Exchange Act, the above amount is
contingent on the filing of the Securities Registration
Statement.

2. Objective and Reasons for Subscription(1) Objective and Reasons for Subscription
As stated previously under I. Business and Capital Partnership, 1. Objective of the business andcapital partnership, the capital increase through private placement is being executed in conjunction
with a business partnership between GMO Payment Gateway, GMO Internet, Sumitomo Mitsui
Financial Group and Sumitomo Mitsui Banking Corporation. To enhance the effectiveness of thebusiness partnership, GMO Payment Gateway and Sumitomo Mitsui Banking Corporation will
execute a capital partnership agreement that will strengthen the relationship between the twocompanies, contribute to mid-to-long term growth of GMO Payment Gateway, and benefit existing
shareholders.
Further, in order for GMO Payment Gateway to maintain 20% annual profit growth over the next ten
years, the company’s future growth strategy includes expanding new business fields, increasing
number of merchants, expanding geographically (supporting Japanese merchant ecommerce sales
in Asia), and strategic expansion of ecommerce. One of the important pillars of this strategy is tocontinue strengthening products, and part of that is expanding financing services including early
payment services to aid merchants in improving cash flow, transaction lending services that offer
financing to merchants who operate BtoC ecommerce or other non-face-to-face businesses withstrong growth potential, the GMO Pay Later service, a payment method that many merchants are
implementing, and for which there is strong consumer demand. Further, given the credit risk
associated with financing services, expanding these services will require GMO Payment Gateway
strengthen shareholders’ equity in order to take on risk assets such as short-term loans andaccounts receivable.

5In order to realize this growth strategy, working capital will be required to expand the financing
services business. GMO Payment Gateway determined that it was essential to further strengthen
earnings base and raise capital, as well as to grow performance by partnering with the subscriber,
and that raising capital through a private placement was the best method for achieving these goals.
GMO Internet currently owns 51.6% of outstanding shares in GMO Payment Gateway and there will
be no change to GMO Internet’s ownership ratio after the capital subscription.

3. Amount to be Raised, Use and Investment Schedule(1) Amount to be raised
i
ii
iii

Total amount to be raised
Estim ated issue costs
Net amount to be raised

JPY 7,999,931,600
JPY 37,000,000
JPY 7,962,931,600(notes) 1. Estimated issue costs are exclusive of consumption tax etc.
2. Estimated issue costs include legal costs, advisory commissions, registration related fees,
and fees for creating and filing the Securities Registration Statement.

(2) Specific Use of Capital Raised
The objective of the capital increase through private placement is to strengthen capital in order toenhance the company’s earnings base and to as well as to grow performance by partnering withthe subscriber. The above net amount to be raised will be used as follows.
Since GMO Payment Gateway was listed in April 2005, it has aimed to reach JPY10 billion in
operating profit by the year 2020. Until the investment schedule below is complete the funds will
be held in a deposit account or other minimum risk operation. Of that JPY10 billion in profit thecompany aims for 20% to be derived from financing services, however in order to achieve this,the company will need to take on risk assets such as short-term loans and accounts receivable ona scale of around 1% of total annual transaction value. In order to provide for the credit risk
associated with the financing business, and increased risk assets, the company considers that itneeds to raise shareholders equity by 20%. The company estimates that annual transaction
volume will reach around JPY 4 trillion by 2020. 1% of that amount is JPY 40 billion yen, and 20%of that amount is JPY 8 billion, and this is the amount the company determined was required toboost shareholders equity.
GMO Payment Gateway also provides early payment services to aid merchants in improving cash flow,transaction lending services that offer financing to merchants who operate BtoC ecommerce or othernon-face-to-face businesses with strong growth potential, and many merchants are implementing the
GMO Pay Later service, a payment method for which there is strong consumer demand. In order togrow these core financing services, the company believes it is necessary to increase working capital.

Specific Use of Capital Raised
i. Investment in establishment ofjoint venture company based on thecapital partnershipii. Increase in operating capital toexpand financing services

Amount (JPY)

Investment Schedule

500,000,000

10/2015 – 10/2016

7,462,931,600

6/2015 – 5/2017

6

i. Investment in establishment of joint venture company based on the capital partnership
One of GMO Payment Gateway’s business initiatives in payment services is to form a joint
venture company with Sumitomo Mitsui Banking Corporation in October 2015 through abusiness and capital partnership agreement with GMO Internet, Sumitomo Mitsui Financial
Group and Sumitomo Mitsui Banking Corporation. All companies will be shareholders in the joint
venture company. The joint venture will combine the strong business platform and domestic andglobal customer base of Sumitomo Mitsui Banking Corporation with the progressive payment
services of GMO Payment Gateway, a company with 20 years industry experience, and thecompetitive technology and resources that allow GMO Payment Gateway to offer payment
services with a full suite of payment methods. The partnership plans to offer high value-add
services to Sumitomo Mitsui Banking Corporation customers.
Through provision of these services the company aims to better meet payment service demands,
increase market share, and establish a strong position in the payment space, and in the future to
become a leader in the Japanese payment services industry.
The first step in realizing this initiative is to establish a joint venture based on the business andcapital partnership and allocate funds to the company.

ii. Increase in working capital to expand financing services
GMO Payment Gateway provides early payment services to aid merchants in improving cash
flow, transaction lending services that offer financing to merchants who operate BtoC
ecommerce or other non-face-to-face businesses with strong growth potential, and manymerchants are implementing the GMO Pay Later service, a payment method for which there isstrong consumer demand. Capital raised will be used to increase working capital and growthese core financing services.
The GMO Payment Gateway early payment service aids merchants in improving cash flow
based on ecommerce transactions between the consumer and merchant, supporting
merchants by bringing forward the date of future payments. There is strong customer demand
for this service. Under the service, the company advances credit card payments to themerchant prior to receiving payment from the credit card company and therefore there is aperiod of time between the two payments during which the company requires capital toadvance the payments. In order to expand this business it is expected that an increase incapital available for advances will be required. For this reason, capital raised will be allocated to
expanding this service by increasing working capital.
Further, among the company’s merchants there are many businesses with strong growthpotential. These businesses desire to expand but in some cases are unable to do so because
they face difficulty in being able to borrow from financial institutions and secure working capitalin a timely manner. In response to this, GMO Payment Gateway plans to expand its transaction
lending business, supporting the growth of merchants by enabling them to secure working
capital. In this business, GMO Payment Gateway analyzes a series of the merchant’stransactions to gain an understanding of sales trends. Based on sales performance, thecompany determines the size of loan the merchant would be able to repay and provides thefunds the merchant requires in a timely manner without requiring collateral, in order to support
the accelerated growth of the merchant. The expansion of this service will require the company
to have funds available, and for this reason capital raised will be allocated to expanding thetransaction lending business by increasing working capital.
The GMO Payment Gateway service, GMO Pay Later is a payment method that enables thebuyer to pay for their purchase at a convenience store or post office after receiving delivery.

7

Since the service was launched, the company has minimized credit risk by developing expertisein assessing merchants and products, and recovery rate of receivables. The service is seeing
strong growth and has outperformed the company’s expectations both in the number ofmerchants who have implemented the service and in transaction volume. There is highconsumer demand for this payment method and the service is expected to continue growing. A
certain level of credit risk will be required to increase the volume of payments, and this will
require capital. For this reason, capital raised will be allocated to expanding this service byincreasing working capital.

4. View in regard to Reasonable Use of Funds
As stated above under II Issue of New Shares in Private Placement, 3. Amount to be Raised, Use andInvestment Schedule (2) Specific Use of Capital Raised, through the establishment of a joint venturecompany, the company aims to better meet payment service demands, increase market share,establish a strong position in the payment space, and in the future to become a leader in theJapanese payment services industry. GMO Payment Gateway also aims to grow earnings by
expanding its financing services business.
The company believes this will further grow corporate value and benefit existing shareholders, and forthis reason determined that the stated use of capital raised in the private placement is reasonable.

5. Fairness of Share Issue Conditions etc.
(1) Basis for and details of how the issue price was calculated
The issue price in the capital increase through private placement was agreed at GMO Payment
Gateway board of directors meeting on June 9, 2015 to be based on the average closing price ofthe company’s common shares on the Tokyo Stock Exchange in the month through to thebusiness day prior to the board decision (June 8, 2015). The issue price is 3,092 yen.
The reason that the board elected to adopt the average closing price in the month through to thebusiness day prior to the board decision was that the company’s stock price has been rising overthe past six months. If the issue price was based on the average of the closing price on theprevious business day, in the three months prior and the six months prior then the price would belower than the company’s current stock price. It was determined that this may not be in theinterest of minority shareholders. As stated above, the company’s stock price has been rising,
however in the month or so prior to the date of the board meeting the price dropped sharply andthere have been significant fluctuations in recent share price. Because of this unusual movement
in stock price, rather than set the issue price at the closing price on the day prior to the board
decision, it was determined that it would be more reasonable to base the price on the average
price over a fixed period in order to offset the impact of temporary stock price fluctuations.
The issue price of 3,092 yen is a premium of 0.88% (all decimal amounts rounded up) over theclosing price on the business day prior to the board decision (3,065 yen), 1.68% over the averageclosing price in the three months prior (3,041 yen), and 16.07% over the average closing price inthe six months prior (2,664 yen).
The calculation of the issue price was based on the guidelines for handling a capital increase
through private placement issued by the Japan Securities Dealers Association, and the board
determined that the issue price did not unfairly advantage the subscribers.
Of the three external members of the company’s board of auditors, two members, Akihiro Suzuki
and Kazuo Ikeda assessed the decision in accordance with the Company Act and with theguidelines for handling a capital increase through private placement issued by the Japan
Securities Dealers Association, determined that there were no facts to consider that would violate
any law, and expressed to the board concurrence that the issue price did not unfairly advantage

8the subscribers.
The two auditors determined that the basis the issue price represented an objective share pricebased on market price, and was calculated using the average price over a fixed period of time,that the issue price was not discounted, that temporary fluctuations in share price had been offset,that the subscribers would not profit from recent fluctuations in share price and that overall theissue price was set in accordance with the guidelines for handling a capital increase throughprivate placement issued by the Japan Securities Dealers Association.
Masashi Yasuda, the third external member of the Board of Auditors, serves concurrently as
Chief Financial Officer of GMO Internet, and as a subscriber in the transaction has a conflict ofinterest. For this reason he refrained from expressing an opinion in this matter.
(2) Basis for determining that the number of shares issued and that the extent of dilution isreasonable
Looking forward to future business growth, the company needs to increase working capital toexpand its financing services business and also requires capital to invest in the joint venture
payment services company. After considering the capital requirements of these initiatives andlooking at cash on hand, GMO Payment Gateway determined that the scale of the capitalincrease through private placement was appropriate.
The number of new shares to be issued in the capital increase constitute 7.49% of total
outstanding shares, voting rights associated with the new shares constitute 7.49% of total voting
rights and a certain level of dilution will occur. .
However, the capital that will be raised will be invested in establishing a joint venture company
based on this business and capital partnership, and in increasing working capital to expand thefinancing services business. The view of the company is that this will increase earnings andimprove corporate value. While the capital increase through private placement will result in
temporary dilution of shares, in the mid-to-long term, it will benefit shareholders. For this reason it
was determined that the number of shares issued and the extent of dilution was reasonable
Further, because the capital increase through private placement is a transaction with a majority
shareholder, on June 9 the two GMO Payment Gateway auditors that have no conflict of interestin the transaction (Mr Suzuki and Mr Ikeda), submitted a statement expressing the opinion thatthe decision to execute a capital increase through private placement did not harm minority
shareholders for the following reasons.
i. GMO Payment Gateway requires funds in relation to its financing services business and after
considering the credit risk, the decision to raise capital through a private increase was deemed
reasonable due to the need to increase shareholder equity.
ii. The company’s stock price has been rising over the past six months. If the issue price wasbased on the average of the closing price on the previous business day, in the three months priorand the six months prior then the price would be lower than the company’s current stock price.
Because there have been significant fluctuations in share price, rather than set the issue price at
the closing price on the day prior to the board decision, basing the price on the average priceover a fixed period would offset the impact of temporary stock price fluctuations. Considering that
this calculation base is objective and fair the decision to set the issue price at the average closing
price in the month through to the business day prior to the board decision was reasonable.
iii. The processes surrounding the capital increase decision were fair and the result of
negotiations with the subscribers on multiple occasions, and that the board members who
participated in the evaluation and decision to execute the private placement had no conflict ofinterest in the transaction.
For these reasons, GMO Payment Gateway determined that the number of shares issued andthe extent of dilution was fair to existing shareholders.

96. Reasons for Selecting the Subscribers(1) Overview of Subscribers
i. Sumitomo Mitsubishi Banking Corporation
Please refer to I. Business and Capital Partnership, 3. Overview of Partners in CapitalPartnership above.
ii. GMO Internet, Inc.
Please refer to I. Business and Capital Partnership, 3. Overview of Partners in CapitalPartnership above.
(2) Reasons for Selecting the Subscribers
In regard to the selection of Sumitomo Mitsui Banking Corporation, please refer to I.
Business and Capital Partnership, Objective of the business and capital partnership above.
In regard to the selection of, GMO Internet, the company has a thorough understanding of
the GMO Payment Gateway business and future vision, and its policy is to generate profits inboth companies by work together to expand ecommerce business. GMO Internet also
manages the GMO Internet Group of which GMO Payment Gateway is a part, and GMO
Payment Gateway online credit card payment processing services are positioned as a key
growth area for the Group. With the objective of enhancing the partnership with GMO
Internet Group, the Chief Executive Officer of GMO Payment Gateway serves as an external
director on the GMO Internet board. There are also members of the GMO Internet board
serving as external directors on the GMO Payment Gateway board, and the two companies
have a close cooperative relationship. GMO Internet recognizes that the capital increase
through private placement will contribute to further growth of payment services, a key growtharea for the Group overall, by strengthening the company’s balance sheet. GMO Internet
was identified as a potential subscriber and selected after agreeing with the objectives of thetransaction.
Both GMO Internet and Sumitomo Mitsui Banking Corporation were consulted in thedecision to share the subscription between the two companies. GMO Internet expects thepartnership to bring about further growth in payment services, enhancing synergies
throughout the GMO Internet Group Internet Infrastructure business segment andcontributing to GMO Internet consolidated earnings. GMO Internet held discussions with
Sumitomo Mitsui Banking Corporation in regard to joint participation in the subscription. As aresult the two companies requested to participate on an equal level in the subscription, andas GMO Payment Gateway had no objection, it was determined that both companies would
participate in the capital increase through private placement.
(3) Ownership Policies of Subscribers
In regard to the shares to be allocated in the capital increase through private placement,
GMO Internet does not plan to sell its shares to a third party, and plans to hold its stake forthe long term. Sumitomo Mitsui Banking Corporation also plans to hold its shares for the
mid-to-long term, and GMO Payment Gateway received written confirmation of this from bothparties. If either of the two companies plans to sell all or part of it holdings within two years of
the payment date, they must provide written notice of the sale to GMO Payment Gateway
including the name and address of the purchaser and the number of shares sold. GMO
Payment Gateway will report the sale to the Tokyo Stock Exchange, and the purchaser willagree that the report will be submitted for public inspection. An agreement to this effect will
be executed on June 25.

10(4) Confirmation Subscribers have Sufficient Assets
GMO Payment Gateway assessed the total assets, net assets, cash and equivalents statedin the most recent quarterly financial statements of Sumitomo Mitsui Banking Corporation(filed November 28, 2014) , and GMO Internet (filed May 12, 2015), and determined that bothparties have sufficient assets to participate in the capital increase through private placement.

7. Major Shareholders and Ownership Ratio after the Private Placement
Prior to Subscription (as of March 31, 2015)
GMO Internet, Inc.
51.66%
Japan Trustee Services Bank, Ltd.
6.45%
(Custodial Account)
JPMC OPPENHEIMER JASDEC
LENDING ACCOUNT (Standing
3.21%
Proxy: The Bank of Tokyo
Mitsubishi UFJ)
Issei Ainoura
The Master Trust Bank of Japan,
Ltd. (Custodial Account)
CBNY-GOVERNMENT OFNORWAY(Standing Proxy: Citibank Japan)
STATE STREET BANK AND
TRUST COMPANY 505001(Standing Proxy: Mizuho Bank)
Trust and Custody Services Bank
(Securities Investment Custodial
Account)
STATE STREET BANK AND
TRUST COMPANY 505041(Standing Proxy: HSBC, Tokyo
Branch, Custody Div.)STATE STREET BANK AND
TRUST COMPANY(Standing
Proxy: HSBC, Tokyo Branch,
Custody Div.)

After Subscription
GMO Internet, Inc.
Japan Trustee Services Bank, Ltd.
(Custodial Account)

3.36%
Sumitomo Mitsui Banking
Corporation

2.89%

JPMC OPPENHEIMERJASDEC LENDING ACCOUNT(Standing Proxy: The Bank ofTokyo Mitsubishi UFJ)

2.15%

Issei Ainoura

2.08%

The Master Trust Bank of Japan,
Ltd. (Custodial Account)

1.63%

1.16%

51.66%
6.00%

CBNY-GOVERNMENT OFNORWAY(Standing Proxy: Citibank Japan)
STATE STREET BANK AND
TRUST COMPANY 505001(Standing Proxy: Mizuho Bank)

2.99%

2.69%
2.00%

1.93%

1.51%

1.08%
1.05%

Trust and Custody Services Bank
(Securities Investment Custodial
Account)

1.05%

STATE STREET BANK AND
TRUST COMPANY
505041(Standing Proxy: HSBC,
Tokyo Branch, Custody Div.)

0.98%

8. Outlook
GMO Payment Gateway considers that the business and capital partnership and the capitalincrease through private placement will contribute to building corporate and shareholder value;
however, at this time it is not yet known what impact the transaction will have on consolidated results
for the FYE9/2015. Once the impact on results is clear, it will be promptly disclosed.

9. Processes relating to the Corporate Code of Conduct
The capital increase through private placement; i. Will result in less than 25% share dilution, ii. Will
not result in a change in the majority shareholder (including changes as result of the conversion or
exercise of equity warrants), and therefore does not require review by an independent third party or
shareholder consent under Article 432 of the Tokyo Stock Exchange Securities Listing Regulations.

10．Items relating to a Transaction with a Majority Shareholder

11

As GMO Internet is a subscriber in the capital increase through private placement, it is a transaction
with a majority shareholder. The GMO Payment Gateway Corporate Governance Report releasedon January 5, 2015 states that the company will always carefully consider any business transaction
with its parent company or any GMO Internet Group company, whether it is a new transaction or thecontinuation of an existing transaction, comparing with the conditions of transactions with third
parties to ensure that transaction conditions are fair from the viewpoint of minority shareholders.
Specifically, the company periodically reviews and compares conditions of transactions with third
parties, and the finding are reported to a meeting of the Board of Directors that includes external
Directors who are independent from the parent company.
At the GMO Payment Gateway Board of Directors meeting convened June 9, 2015, the following
board members did not participate in the decision making process on the capital increase throughprivate placement due of reasons of conflict of interest; Masatoshi Kumagai, CEO of majority
shareholder, GMO Internet, Issei Ainoura, and Ryu Muramatsu who is also on the board of a GMO
Internet subsidiary.
Further, GMO Internet Chief Financial Officer, Masashi Yasuda who serves on the GMO Payment
Gateway Board of Auditors as an external member, also did not participate in the decision making
process on the capital increase through private placement due of reasons of conflict of interest.
On June 9, 2015 the two GMO Payment Gateway auditors that do not have a conflict of interest in
the transaction (Mr Suzuki and Mr Ikeda), submitted a statement to the Board of Directors
expressing the opinion that the decision to execute a capital increase through private placement did
not harm minority shareholders for the following reasons.
i. GMO Payment Gateway requires funds in relation to its financing services business and after
considering the credit risk, the decision to raise capital through a private increase was deemed
reasonable due to the need to increase shareholder equity.
ii. The company’s stock price has been rising over the past six months. If the issue price was basedon the average of the closing price on the previous business day, in the three months prior and thesix months prior then the price would be lower than the company’s current stock price. Because
there have been significant fluctuations in share price, rather than set the issue price at the closing
price on the day prior to the board decision, basing the price on the average price over a fixed period
would offset the impact of temporary stock price fluctuations. Considering that this calculation baseis objective and fair the decision to set the issue price at the average closing price in the monththrough to the business day prior to the board decision was reasonable.
iii. The processes surrounding the capital increase decision were fair and the result of negotiations
with the subscribers on multiple occasions, and that the board members who participated in theevaluation and decision to execute the private placement had no conflict of interest in thetransaction.

11．Business results and Equity Financing in the Three Most Recent Years(1) Business Results in the Three Most Recent Years (consolidated)
FYE 9/2012
FYE 9/2013
FYE 9/2014
Consolidated Net Sales
JPY 4,708 million
JPY 5,764 million
JPY 7,205 million
Consolidated Operating Profit
JPY 1,753 million
JPY 2,048 million
JPY 2,476 million
Consolidated Ordinary Profit
JPY 1,764 million
JPY 2,047 million
JPY 2,527 million
Consolidated Net Profit
JPY 960 million
JPY 1,217 million
JPY 1,515 million
Consolidated Net Profit per
JPY 28.01
JPY 35.38
JPY 43.92
Share
Dividend per Share
JPY 19.50
JPY 24.50
JPY 30.00
Consolidated Net Assets per
JPY 144.25
JPY 163.12
JPY 197.15
Share(notes) 1. On July 1, 2012 the company executed a 200-for-1 stock split of common shares. On
October 1, 2014 the company executed a 2-for1 stock split of common shares.

12

Consolidated Net Profit per Share, Dividend per Share and Consolidated Net Assets per
Share for FYE9/2012 are presented as if the stock split had been executed on the firstday of the fiscal year.
2. Shares held in the Board Incentive Plan are not treated as treasury shares in thecalculation of consolidated net profit.
(2) Current No. of Outstanding Shares and Shares Underlying Convertible Securities (as of 3/31/2015)
Outstanding Shares
No. of shares underlying
convertible securities atcurrent conversion price

Number of Shares
34,549,200% of Outstanding Shares
100.00%12,2700.04%(3) Recent Share Pricei Share Price over the Three Most Recent YearsFYE 9/2012
FYE 9/2013
FYE 9/2014
360,000
2,673
Open (JPY)
1,406*1,800*1,337393,000
6,040
High (JPY)
2,787*1,965*2,552
246,100
2,630
Low (JPY)
1,224*1,231*1,315
283,000
4,960
Close (JPY)
2,672*1,415*2,480(notes) 1. A stock split was executed in FYE 9/2012. Asterisk indicates ex-rights price.
(A 200-for-1 stock split of common shares executed on July 1, 2012.)
2. A stock split was executed in FYE 9/2014. Asterisk indicates ex-rights price.
(A 2-for-1 stock split of common shares executed on October 1, 2014.)
ii Monthly trends in the most recent six months
1/20152/20153/20154/20155/2015
2,281
2,068
2,605
Open
2,850
3,005
2,342
2,670
3,075
High
3,495
3,245
2,007
2,055
2,423
Low
2,795
2,723
2,060
2,634
2,844
Close
3,105
3,080
(notes) June figures represent trend between June 1 and June 8, 2015.
iii. Share Price on the business day prior to the board decision
June 8 2015
3,040
Open
3,115
High
3,030
Low
3,065
Close
(4) Equity Financing in the Three Most Recent Years
None

13

6/2015
3,050
3,185
2,992
3,065

12．Summary of Issue
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)

No. of new shares tobe issued
Subscription Price
Total Proceeds
Amount to be Allocatedto Capital
Total Amount to be
Allocated to Capital
Subscription Method
Application Dates
Issue Date
Subscribers and No. of
Shares allocatedOther

2,587,300
JPY 3,092 per share
JPY 7,999,931,600
JPY 1,546 per share
JPY 3,999,965,800
Private placement
June 25, 2015
June 25, 2015
Mitsui Sumitomo Banking Corporation 1,250,800 Shares
GMO Internet, Inc. 1,336,500 Shares
Under the Securities and Exchange Act, the above amount is
contingent on the filing of the Securities Registration
Statement.

(Reference) Consolidated Results Forecast for the Current Fiscal Year (published October 31, 2014)
Consolidated
Consolidated
Consolidated
Consolidated
Net Sales
Operating Profit
Ordinary Profit
Net Profit
Current Forecast
JPY 8,656 millions JPY 2,974 millions
JPY 2,985 millions JPY 1,797 millions(FYE 9/2015)
Previous Actual
JPY 7,205 millions JPY 2,476 millions
JPY 2,527 millions JPY 1,515 millions(FYE 9/2015)14