(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.
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Shares of the Carlyle Group Inc.-backed X-ray device manufacturer declined 10% from its offering price of ¥1,260 per share to ¥1,130 in Tokyo on Friday after it opened at ¥1,205. That’s in contrast to Tokyo Metro Co.’s 45% surge on its debut just two days ago. The broader Topix index slid as concern over a general election this weekend weighed on investor sentiment.
Rigaku IPO Raises More Than $700 Million After Pricing at Top of Range
“The chip-related sector is becoming very volatile, and that’s probably limiting the upside in the stock price,” said Ikuo Mitsui, a fund manager at Aizawa Securities Co., adding that weak market sentiment is also hurting the shares. “If the sales outlook related to semiconductor manufacturing improves, there’s room for the stock to be re-evaluated.”
The IPO of Rigaku, which manufactures products including semiconductor metrology and wafer inspection tools, raised ¥112.3 billion ($739 million) in the second-largest offering in Japan this year after Tokyo Metro’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.
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 closing price)
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