Initial public offerings in Japan will climb to the most in three years as investors regain confidence sapped by a record earthquake, according to Nomura Holdings Inc. (8604), the top-ranked arranger of Japanese stock sales.
At least 15 Japanese companies will probably announce debut share sales from Oct. 1, bringing the number of IPOs to 35 to 40 by the end of the year, exceeding last year’s 22 and the 19 in 2009, said Masaharu Kambe, head of Nomura’s IPO department. Medical research ventures, game makers, manufacturers and solar energy firms are among companies preparing offerings, he said.
Japan’s equity capital market has begun to recover, with nine companies selling shares in IPOs from the end of May after an 11-week hiatus in the aftermath of the March 11 disaster. RaQualia Pharma Inc., a drugmaker, is among businesses that held first-time sales after postponing the offerings following the catastrophe.
“The market may be starving for fresh companies with good prospects,” Kambe, 48, said in an interview in Tokyo. “The earthquake caused a sense of stagnation, though the scale was much smaller than the financial crisis in 2008. Businesses are making progress on rebuilding and earnings are recovering.”
Kambe didn’t say how much the 15 companies will seek to raise, and he declined to comment on any deals involving Nomura.
Companies have raised 33 billion yen ($428 million) from IPOs in Japan in the first eight months of this year, 97 percent less than the 1.06 trillion yen from the same period a year earlier, according to data compiled by Bloomberg. Last year’s sales were led by Dai-Ichi Life Insurance Co., which raised about 1 trillion yen from what was at the time the world’s biggest IPO in two years.
So far this year, 16 companies have sold shares in IPOs in Japan. Those stocks have gained an average 12 percent since they were first publicly offered to investors, Bloomberg data show. By comparison, the 135 enterprises that debuted on U.S. exchanges in 2011 declined 7.5 percent from their offered prices.
Tokyo-based Nomura arranged the country’s most successful IPO of the year. Shares of Morpho Inc., a developer of image processing technologies that raised 867 million yen in July, have more than doubled since they were offered to the public for 2,250 yen. They traded at 4,900 yen on the Tokyo Stock Exchange as of 10:40 a.m. in Tokyo.
KLab Inc., an application provider, says the March quake and tsunami didn’t deter it from a goal of listing on the Tokyo Stock Exchange this month. The company said this week that it will offer shares to investors from Sept. 7 to Sept. 13 for 1,540 yen to 1,700 yen.
“The earthquake didn’t affect our listing plan as we don’t have goods and factories, unlike manufacturers,” Takashi Fukuda, who heads business planning at KLab, said in an interview. “More companies with unique business models in areas like social media, information technology and the internet will go public to enhance their credibility and reputation.”
Daiwa Securities Group Inc. (8601), Japan’s second-largest brokerage, is arranging the sale for KLab, which produces content including a game for mobile phones that lets players take the role of a hostess in a gentlemen’s club.
Daiwa is also optimistic local stock-market fundraising will withstand financial volatility driven by Europe’s sovereign debt woes and a U.S. economic slowdown. Some companies still have an appetite for funding or acquisitions to improve profitability, Yoshifumi Otsuka, head of equity capital markets at the Tokyo-based firm, said in an interview last month.
JAL, Tokyo Metro
Japan Airlines Co., Tokyo Metro Co. and Tokyo Stock Exchange Group Inc. are among companies that have signaled intentions to offer shares to the public. Nikko Asset Management Co. began choosing banks to manage an IPO, three people familiar with the plan said in July.
Tokyo Stock Exchange, operator of Japan’s largest equity market, is pressing ahead with preparations for an initial offering even after profit tumbled following the quake, Chief Executive Officer Atsushi Saito said in July.
Overall share sales in Japan have declined this year as the stock market slides amid three quarters of economic contraction. Japanese equity and equity-linked sales totaled 1.37 trillion yen in the first eight months, down from 3.86 trillion yen in the same period last year, data compiled by Bloomberg show. The benchmark Topix index of shares has lost 16 percent this year.
Nomura is the No. 1 arranger of Japanese IPOs this year by the number of completed offerings, according to Bloomberg data as of Sept. 6. The bank handled seven share sales, followed by Daiwa, Mizuho Securities Co. and Mitsubishi UFJ Morgan Stanley Securities Co. with three each. Daiwa topped the ranking by amount raised, managing IPOs that amassed 18 billion yen.
“There’s more to come,” said Nomura’s Kambe, who is in charge of 90 employees in Tokyo, Nagoya and Osaka. “I feel a breeze blowing of companies that have new services and technologies. Japanese companies can’t be underestimated.”
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