Dynam Japan Holdings Co., the first Japanese company to have its primary listing in Hong Kong, dropped 10 percent on its debut after the pachinko hall operator raised net proceeds of HK$1.5 billion ($194 million).
The pachinko hall operator closed at HK$12.54 in Hong Kong, 10 percent below its offer price of HK$14.
Dynam is going public as companies that completed first-time share sales this year in Hong Kong are down on average 7.6 percent from their offer prices, Bloomberg data show, with deal sizes weighted. Pachinko is a form of gambling in Japan that involves mechanical games similar to slot machines.
“There’s a lack of interest,” said Kenny Tang, general manager at AMTD Financial Planning Ltd. of the Dynam offering. “The trading volume is very thin. Hong Kong investors may not understand what the pachinko business is about as there isn’t a single pachinko company here.”
The company would like to get into the casino business if Japan legalizes gambling houses, Chief Executive Officer Yoji Sato said today in an interview with Bloomberg Television.
“If legal systems are developed for casinos in Japan, Dynam group would like to partner as a casino operator with big overseas casino operators,” Sato said. His company has been getting offers to meet with Macau gambling companies, he said.
The Tokyo-based company had originally offered its shares at HK$14 to HK$16 each, according to a prospectus for the sale.
New Share Sales
Piper Jaffray Asia Securities Ltd., Shenyin Wangui Capital (H.K.) Ltd. and Citic Securities Corporate Finance (HK) Ltd. were the joint lead managers of the IPO, according to Dynam’s filing.
The company posted profit of 15.9 billion yen ($202 million) on sales of 165.1 billion yen for the financial year through March 31, the filing showed.
Companies have raised $5.6 billion through first-time share sales in Hong Kong this year, the lowest for similar periods since 2009, according to data compiled by Bloomberg. These deals include offerings by firms already listed in other markets.
Dynam, with 355 pachinko halls in 46 of 47 prefectures in Japan at the end of March, is the nation’s second-largest operator, according to a pre-listing filing to Hong Kong’s stock exchange.