(Bloomberg) -- Rigaku Holdings Corp.’s shares fell on debut, even after the results of its offering suggested that investors still have appetite for big Japanese stock deals in a busy primary market.
Shares of the Carlyle Group Inc.-backed X-ray device manufacturer opened at ¥1,205 in Tokyo on Friday, compared with its offering priced at the top of the marketed range of ¥1,260 per share. The initial public offering raised ¥112.3 billion ($738 million) in the second-largest IPO in Japan this year after Tokyo Metro Co.’s giant ¥348.6 billion deal. Order books for the international portion were covered the same day it started taking investor orders, according to people familiar with the matter.
Tokyo Metro’s IPO pushed up total Japanese offerings so far in 2024 to an eight-year high for the period, Bloomberg-compiled data show. The subway system operator’s shares jumped 45% on its first day of trading, and investors were watching Rigaku’s debut to see if could follow the same way.
A busy IPO market in Japan may lure more global investors to plough funds into the nation’s equities, at a time when policymakers are pushing companies to improve corporate governance to make their shares more attractive.
Rigaku gets 69% of its revenue from overseas, and it aims to further expand its sales overseas, where the potential for growth will likely be stronger than in Japan.
“It’s all about how the market sees the valuation,” said Hiroaki Tomori, executive fund manager at Mitsubishi UFJ Asset Management Co. Based on his calculation, the stock price has room to rise 30% from the offering price of ¥1,260, assuming a price-earnings ratio of 30 times in line with its peers, he said.
(Updates with opening price)
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