Rigaku slumps in market debut after $863 million IPO

Reuters

18:04 JST, October 25, 2024

TOKYO, Oct 25 (Reuters) – Rigaku’s shares fell 10% in their market debut on Friday, after buyout firm Carlyle Group steered the Japanese X-ray testing tool maker to an $863 million initial public offering.

Shares closed at 1,130 yen. The company had priced the IPO at the top end of a 1,230 to 1,260 yen indicative range.

Rigaku, founded in 1951, supplies testing machines to the chip industry and makes 70% of its sales overseas.

With the yen depreciating rapidly, there is growing anticipation of an upward swing for manufacturers with a high overseas sale ratio, analyst Kazumi Tanaka at DZH Financial Research wrote in a client note ahead of the debut.

However, despite the yen’s deprecation, the stock market has been soft ahead of the general election, centered on semiconductor-related companies, he wrote.

Rigaku peers Shimadzu and Hamamatsu Photonics have both slipped from recent highs.

Japan’s stock market has also been volatile as investors digest developments including a surprise interest rate hike, a change of prime minister and the election set for Sunday.

The election, nine days before the U.S. chooses a new president, could see voters end more than a decade of Liberal Democratic Party dominance amid anger over a funding scandal.

Japan has been a focus for buyout firms as companies shed non-core assets, go private or grapple with management succession issues.

Rigaku’s listing was Carlyle’s ninth IPO exit for its Japan focused business. It comes nearly four years after the buyout firm said it would buy roughly 80% of Rigaku through its fourth Japan fund, with the tool maker saying it planned to list in the subsequent years.

Rigaku has experienced significant growth over the past four years, leveraging the benefits of working alongside a global financial sponsor, said Rigaku CEO Jun Kawakami in a statement.

Around a third of Rigaku’s sales were to the semiconductor and electronic components markets last year, with the company counting the 10 largest chip industry players among its customers.

Rigaku also supplies the pharmaceutical and chemical industries.

Buyout firm Bain Capital scrapped its plans for an October IPO for chipmaker Kioxia after investors pushed it to almost halve the valuation it was seeking, Reuters has reported.

On Wednesday, shares in Tokyo Metro popped 45% in their market debut after bagging $2.3 billion in Japan’s largest IPO in six years with the lure of sizeable dividends.

The subway operator has slid in subsequent sessions with shares falling 5% on Friday. The benchmark index closed down 0.6%.

($1 = 151.7700 yen)