A plan to cull the smallest listings on the Tokyo Stock Exchange is spurring a record number of buyouts of young companies in Japan, reflecting Tokyo’s push to create more billion-dollar startups to better match the country’s global standing in scientific research.
Regulators are ratcheting up pressure on startups to gain more scale before debuting on the stock market, warning that the TSE will seek to delist companies that fail to reach a market value of at least ¥10 billion ($66 million) within five years of going public, starting 2030. More than 60% of the roughly 600 companies on Tokyo’s Growth Market for young companies fall below that threshold, representing some $12 billion of value.
Dozens of founders are selling their companies rather than pursuing initial public offerings — the traditional path to gain respect from an establishment that still views young companies with skepticism. The hope is that consolidation would help temper a hyper-competitive domestic market and allow companies with one-of-a-kind technological knowhow to attract bigger pools of capital.
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