Hitachi Ltd.’s hard-drive unit plans to raise as much as $1 billion in a U.S. initial public offering and has hired six banks to manage the sale, two people familiar with the plans said.
Hitachi Global Storage Technologies will use New York-based Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley; Bank of America Corp. in Charlotte, North Carolina; and Nomura Holdings Inc. in Tokyo to manage the sale, said the people, who declined to be identified because the information isn’t yet public.
Spinning off the hard disk drive business, the world’s third-largest behind Seagate Technology Plc and Western Digital Corp., may ease concern Hitachi will have to issue more equity after selling $4.5 billion in stock and convertible bonds last year. The unit’s Tokyo-based parent is redefining itself as a provider of power plants, trains and other infrastructure following four years of losses, said David Rubenstein, an analyst at MF Global Ltd. in Tokyo.
“They had a big equity offering last November, and investors might be worried about another one,” Rubenstein said. “This kind of sedates that.”
Hajime Kito, a Tokyo-based spokeswoman for Hitachi, Japan’s third-largest company by revenue, declined to confirm that the company is planning an initial offering. Sales at Hitachi’s San Jose, California-based hard-drive business fell 14 percent to $4.8 billion in 2009.
“At this moment, nothing has been decided,” Kito said. “We continue to explore various possibilities for business growth, and an IPO is just one of them.”
Hitachi fell 0.3 percent to 376 yen at 12:31 p.m. on the Tokyo Stock Exchange. Shares of the industrial group have gained 32 percent this year.
Reuters reported the underwriters for the IPO last week.
While HGST is a large enough business to stand on its own, the timing of an IPO may not be optimal, according to MF Global’s Rubenstein. Shares of Seagate, the world’s largest maker of hard-disk drives, have fallen 46 percent since March 1 on concern the personal computer market is slowing.
“PC demand was very strong in the first and second quarter of this year. It’s tapered off because of a reduction in demand on the consumer side,” Rubenstein said. “In hindsight this should have been done six months ago. They’re going to get 30 to 50 percent lower in offering price.”