ZIGExN CEO Targets Growth Beyond Billionaire Son After IPO

Joe Hirao wants ZIGExN Co. (3679) to surpass companies controlled by Japan’s richest Internet billionaires after its initial public offering saw the shares more than double on the first day investors traded the stock.

“We are aiming to become the largest online company in Japan,” Chief Executive Officer Hirao said in an interview in Tokyo yesterday. That would mean overtaking Masayoshi Son’s Yahoo Japan Corp. (4689) and Hiroshi Mikitani’s Rakuten Inc.

Both companies are customers of ZIGExN, which operates 13 main websites, gathering information on everything from jobs and apartments to cars and dating services. Hirao, 31, attends management and leadership training courses run by SoftBank Corp. (9984), Son’s mobile-phone carrier, as he expands overseas to tap new markets in Asia and Africa.

Shares of ZIGExN surged 158 percent to close at 1,550 yen in Tokyo yesterday compared with the 600 yen paid by investors in the IPO that raised 5.13 billion yen ($51 million). While the stock officially made its debut on the Mothers section of the Tokyo Stock Exchange on Nov. 22, it wasn’t traded that day as bids to buy outnumbered offers to sell by about 4-to-1 at the close.

ZIGExN rose 9 percent to close at 1,689 yen in Tokyo today.

At the IPO price, the company was valued at about 60 times earnings, Hirao said. After the surge of the past two days, ZIGExN stock trades at 232 times earnings, according to data compiled by Bloomberg.

Those ratios compare to 133 times earnings for the TSE Mothers Index that includes stocks listed in that section of the exchange. Yahoo Japan trades at more than 22 times earnings at today’s close, while Rakuten trades at a multiple of 71 times profit. SoftBank has a price-to-earnings ratio of 19.6.

Surging IPOs

“There are needs for job-search websites. The company is operating various websites, so I think the key is how much ZIGExN can add value,” Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management Co. in Tokyo, said by phone. “The current stock price may be too high, which is common for stocks that have listed recently.”

ZIGExN had sales of $14.2 million in the 12 months ended March 31, more than doubling from a year earlier, according to data compiled by Bloomberg. That compares with about $4.2 billion at Yahoo Japan and $5.5 billion at Rakuten.

Hirao became CEO in 2008, when ZIGExN was a venture between Recruit Co. and Drecom Co. In 2010, he led a management buyout and Recruit, a Japanese human-resources company, remains a client.

Yahoo Japan is the nation’s most-visited Web portal and 43 percent owned by Son’s SoftBank.

Japanese IPOs have typically gained on their market debut this year, with only two of the 44 offers that have priced so far in 2013 declining when they first traded, according to data compiled by Bloomberg.

ZIGExN became the 19th Japanese IPO stock to rise 150 percent or more by the end of the first day of trading this year.

To contact the reporter on this story: Grace Huang in Tokyo at xhuang66@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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