In a significant move signaling a resurgence in Japan’s capital markets, Tokyo Metro and Rigaku have initiated processes for a combined $3.13 billion in initial public offerings (IPOs) slated for next month. Tokyo Metro aims to raise $2.25 billion, marking the largest IPO in Japan in six years, while Rigaku, a Carlyle Group-backed manufacturer of X-ray testing tools, targets up to $888 million.
The Tokyo Metro IPO, set for listing on October 23, is projected to bring in approximately 319.55 billion yen ($2.25 billion) at an indicative share price of 1,100 yen. This public offering is significant not only for its size but also because the proceeds will be used to repay reconstruction bonds from the 2011 earthquake and tsunami. The government, which owns a combined 100% of Tokyo Metro, plans to divest half of its shares, with the books closing on October 11. Goldman Sachs, Mizuho, and Nomura are acting as joint global coordinators for this major listing.
Rigaku is set to follow with its IPO on October 25, opening its order book on October 10. The company is expected to achieve a market valuation of $2 billion post-IPO, bolstered by an overallotment option. Bank of America, JP Morgan, Morgan Stanley, and Nomura are managing this offering.
These moves come as the total equity capital markets activity in Japan for 2024 reaches $28.2 billion, driven primarily by an increase in follow-on capital raisings. While IPO activity has seen a sharp decline this year, the anticipated listings from Tokyo Metro and Rigaku could more than double the current total of $1.5 billion worth of IPOs in Japan year-to-date.
The Japanese stock market, which experienced a notable downturn in early August, has rebounded, with the benchmark index up about 13% this year, providing a more favorable environment for these listings. As investor interest in Japanese equities grows, these IPOs may pave the way for further listings and market revitalization.
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