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(Bloomberg) — Japan is poised to welcome larger share-sale debuts in the coming months, invigorating a market that has mostly seen debuts raising less than $100 million in the past decade.
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Subway operator Tokyo Metro Co. said last week that its initial public offering was aiming to raise around ¥319.6 billion ($2.2 billion) — placing it on course for Japan’s biggest listing since SoftBank Corp.’s $21 billion IPO in 2018. The offering joins Carlyle Group-backed scientific-instruments company Rigaku Holdings Corp. which is seeking to raise about ¥109.6 billion in its debut next month.
New listings look to be gaining momentum as the Nikkei 225 Stock Average has rebounded more than 20% from this year’s intraday low set on Aug. 5. Japanese share sales have reached a 20-year high this fiscal year that started April 1, highlighting how not even the equity rout last month has damped investor demand for new stocks.
“The backdrop is positive,” Kelvin Leung, a portfolio manager at Robeco Hong Kong Ltd., said of the environment for Japanese IPOs broadly. “If the fundamentals are good and valuation is not as demanding, I think that would be a good chance to buy.”
Japan has seen more than 1,000 listings since 2014. Of those, nearly 90% have raised less than $100 million, according to data compiled by Bloomberg. Share-sale debuts in Japan have raised $1.4 billion this year, with Tokyo Metro and Rigaku’s listings set to bring that figure closer to the $4.4 billion raised in all of 2023.
“The market today is actually in a pretty healthy position because some of the excesses have come out,” said Zuhair Khan, who runs a long-short fund at Union Bancaire Privée.
Companies in sectors that have seen outsize interest such as artificial intelligence and tourism, which benefited from the post-Covid economic recovery, may have notched better valuations before the August rout, Khan said. “But for most sectors, I think now is actually a good time to go to market and do IPOs,” he added.
Tokyo Metro plans to sell shares on Oct. 23 while Rigaku said it was looking to debut on Oct. 25. Other IPOs in the pipeline include semiconductor memory product maker Kioxia Holdings Corp., whose deal is said could potentially raise about $500 million, and Intermestic Inc., the owner of the Zoff eyewear-store chain.
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