Hong Kong’s HeterMedia Acquires Majority of Boutique LSP Into23

Hetermedia acquires into23

Hong Kong-based financial printing and document services company HeterMedia has announced it will acquire a majority stake in local language service provider (LSP) Into23, according to a filing dated April 20, 2023.

Into23 is a multi-sector LSP providing services across e-learning, technology, eCommerce, marketing, legal and financial, among others. The company generated HKD 5.9m (USD 0.75m) in annual revenues for the year ended March 2023, while before-tax profit stood at HKD 1.0m.

Hong Kong-listed HeterMedia has agreed to pay up to HKD 6.375m (USD 0.81m) for a 51% share in the boutique LSP — comprising 50% cash and up to 50% in earnouts. The company will pay a multiple of 6.3x EBITDA and 1.1x revenues, if the maximum price is achieved.

HeterMedia’s CEO, William Chan, explained the nature of HeterMedia’s operations as “40%: where we focus on digital and non-digital marketing solutions for major financial institutions such as insurance companies, fund houses, PE firms, Asset management companies, and retail banks. 60%: where we offer compliance and disclosure solutions to listed companies in mainland China and Hong Kong.”

Chan also told Slator that HeterMedia’s latest annual revenues are HKD 190m (USD 24.2m) and that there are around 150 people employed across the two companies.

Translation services play a significant role in the wider service offering provided by financial printing companies such as HeterMedia as well as the buoyant capital markets in Hong Kong.  For example, regulators require documents, such as IPO listing prospectuses and annual reports, to be filed in both English and Chinese.

Into23 is not HeterMedia’s first translation-related transaction. In 2019, the company invested EUR 1m in Wordbee, the Luxembourg-based translation management system (TMS) provider. Asked about HeterMedia’s use of translation technology, Chan said, “This will be discussed with Richard [Delanty, CEO of Into23] as he is the expert in this field and see what would create the best interests for our growth.”

Diversification and Turnkey Solutions

Into23’s Delanty summarized the rationale behind the majority-share acquisition as “a strategic move that aligns with our long-term vision to diversify our offerings, tap into new markets, and grow our position in the global translation industry.”

In particular, given Into23’s translation expertise and client relationships in non-financial sectors, the transaction will allow HeterMedia to “broaden its service offerings and reach a wider clientele, thereby reducing its reliance on the financial sector and fostering a more resilient business model,” he added.

For example, “Into23 is currently working with one of the largest regional eCommerce businesses” while “marketing services is a growing sector for HeterMedia,” he added. Into23 also recently acquired Tilt, a Singapore-based digital marketing agency.

Chan and Delanty outlined their perspectives on the supply market for language services in Asia, with Chan observing, “There are many players in the field but not many with the quality that customers are looking for.”

Meanwhile, Delanty said Asia shares similarities with the markets for translation in North America and Europe in terms of growing demand amid a competitive landscape. “However, the Asian market is uniquely diverse in terms of languages, cultures, and varying levels of economic development. This diversity creates both challenges and opportunities for language service providers.”

Delanty continued, “One key opportunity in the Asian market lies in providing turnkey solutions that integrate translation and localization services with global marketing solutions. As businesses in Asia expand into new markets, they require quality translations at scale and effective marketing strategies that resonate with local audiences. This growing overlap between marketing and translation offers potential for LSPs to broaden their service offerings and create value for their clients.”

Delanty will continue in the role of CEO of Into23 post-transaction, and the company will retain its own brand identity.