Japan’s biggest equity rally in four decades is driving a boom in initial public offerings, with new listings this year poised to reach the most since 2007 and every stock rising on its debut.
About 60 companies have gone public in 2013 or plan to do so by year-end, the most since 121 offerings in 2007, according to projections by Nomura Holdings Inc. The 36 IPOs since December have climbed on their first trading day, the longest streak of gains since 39 listings advanced in 2006, data compiled by Bloomberg show. The average opening-day advance this year was 131%, according to the data. Reprocell Inc., a stem-cell medical research company, soared more than fivefold in June for the largest of the year.
“The IPO boom will maintain its momentum for some time to come given the current market environment,” said Koji Uchida, who helps oversee $61 billion at Mitsubishi UFJ Asset Management Co. in Tokyo. “Many companies listing this year have interesting business ideas and good growth potential.”
Initial share sales peaked at 203 in 2000 before declining as Japan’s economy shrank and a 2006 raid on Internet service provider Livedoor Co. for suspected violation of securities regulations sent the TSE Mothers Index, the benchmark gauge for startup stocks, down more than 10% in two days. This year’s revival signals companies are increasingly confident about accessing capital from the world’s best-performing developed stock market, while the perfect IPO winning streak is helping sustain demand from individual investors.
The benchmark Topix index increased 62% in the four quarters through September, the steepest rally since the period ended March 1973, as Prime Minister Shinzo Abe and the Bank of Japan pushed policies to end deflation. Local individual investors accounted for 71% of trading on the TSE Mothers Index by value in the week ended Nov. 8, according to Tokyo Stock Exchange data.
About 80% of companies that completed IPOs this year are trading above their offering price, according to data compiled by Bloomberg. Eneres Co., an energy data service provider, has surged almost fivefold since listing. N Field Co., which provides nursing services, has climbed almost sevenfold.
About 80 companies will go public in Japan next year, with even more slated for 2015, according to Keiji Kuramoto, an executive director at Nomura’s IPO department.