IPO 2001
Q - How did the Japanese IPO do this year?
A. There were 169 IPOs in Japan this year. Total amount raised was 737 Billion¡¡Yen or approx. $5.8B US. This compares to 203 in 2000 but if you look at IPO in the US, which was just 98 deals, I think the IPO market in Japan did quite well despite the poor economy.
JASDAQ and NASDAQ Japan took most of the deals. 97 companies went public on JASDAQ OTC market while 43 companies went public on NASDAQ Japan.
The overall performance of Japanese IPOs were very good. The average Opening price increase for NASDAQ Japan was 74% while for JASDAQ 31%. There was a period in September which several IPO went under the offering price but many of theses deals subsequently recovered.
Q - What are some of the reasons there has been a big increase in new listings¡¡in Japan in the past few months? Has there been a change in market sentiment¡¡etc.?
A - December saw 30 IPOs which was the highest this year. Traditionally, the¡¡final quarter always brings large number of IPOs. Reason is that many company like to go public after they announce their half yearly result.
Second reason is that companies the postponed or delayed their IPO in September decided to file again in November for December IPO.
The Market sentiment for IPO stock changed in October when underwriters, sensed that the market was too weak for aggressive offering, lowered their pricing range and this attracted many bargain hunters.
We saw 6 IPO that doubled the price on opening day between last week of October to First week of November. E System a CRM system integrator's IPO increased by 5 fold on the opening price.
This gave a rush for filing in November and resulted in very busy December IPO.
Q - What's the outlook for the next year?
A - Out look for the year 2002 is very good. I have been interviewing key underwriters and they tell me that they expect to increase the number of offering by perhaps 20% or more.
Fact is that Japanese economy is going through a very drastic change and while many of the major companies are facing mounting problems, new venture companies are cropping up with new and exciting business ideas and doing a tremendous business.
Q - In terms of the types of companies that are listing- do you see a trend? For eg, are there more small sized going public now, compared to the Internet era.
A - Dot Com IPO is long gone. In terms of size of IPO, we will probably see more of the same under 1 Billion Yen IPOs. This year, we only saw 9 IPO that raised more than 10 Billion Yen ($80M) That's tiny 5% of deals. On the other hand, there were 79 IPOs that were under 1 Billion Yen ($8M) which is 46%, nearly half.
As long as the Japanese economy remains in the quagmire, this trend will continue.
In terms of types of companies going public, we will see trend in three key areas.
1. Restaurant chains
2. Healthcare services including drugstore chain
3. IT business which focuses on very narrow niche
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