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Seibu Holdings Inc., owner of Japan’s biggest hotel chain, reduced the size of its initial public offering by at least 73 percent with its largest shareholder opting out after investors balked at the valuation.

Seibu is seeking as much as ¥50.1 billion ($491 million) from a sale of 27.8 million shares, according to a filing from the hotel and railway operator Wednesday. They will offer the shares at ¥1,600 to ¥1,800 each, lower than the ¥2,300 indicative price announced last month.

The IPO comes on the heels of poor offerings by Japan Display Inc. and electronics maker Hitachi Maxell Ltd. in March. The Topix index fell 7.6 percent in the first three months of the year — its worst quarterly performance since the second quarter of 2012.

“The price was definitely too expensive,” Senri Sasahara, chief executive officer of merger advisory firm Innovative Advisor Corp., said by phone in Tokyo. “It might be easier to get enough demand from the market now.”

Cerberus Capital Management LP, whose 35.5 percent stake makes it Seibu’s largest investor, won’t sell any stock in the offering, the statement shows. Seibu was originally planning to raise about $1.8 billion from a sale of as many as 80.9 million shares, according to a prospectus last month.

Seibu is returning to the Tokyo Stock Exchange after a nearly 10-year hiatus brought on by a prolonged shareholder record falsification scandal. It has sold hotels and cut costs after receiving a bailout from Cerberus in 2006.

The company cut the price for the offering after meetings with overseas investors, who considered the indicative price too high, two people familiar with the situation said. Japanese institutions also didn’t show enough appetite for Seibu to sell shares at that price, said the people, who asked not to be identified as the talks were private.

The price range takes into account recent changes in the domestic and overseas markets, as well as sentiment toward new issues, Seibu said in a statement. An official at Cerberus Japan, who asked not to be named, citing company policy, directed queries to the firm’s New York headquarters. Calls to U.S.-based spokesmen for Cerberus weren’t answered outside regular business hours.

Japan Display, a supplier of screens for Apple Inc. devices, slumped 15 percent on its March 19 trading debut after a $3.1 billion IPO. The day before, Hitachi Maxell tumbled 14 percent below its IPO price on its first day of trading. Both are still trading below their offer prices.

Seibu owns the Prince Hotel group with 42 hotels in Japan and seven properties overseas, including the Hawaii Prince Hotel Waikiki. The company runs eight hotels in Tokyo, including the 3,679-room Shinagawa Prince Hotel. In November, the Prince business was ranked as the biggest hotel chain by sales in Japan by the Nikkei Marketing Journal.

Cerberus said last March it was willing to wait as long as three years for a Seibu listing because it wanted to see more steps taken to improve the company’s value. Seibu has been getting ready for an IPO as quickly as possible, with President Takashi Goto saying at the time the company was already “financially prepared” for a listing.

Seibu’s net income for the year ended March probably rose 4.8 percent to ¥16.4 billion, the company said April 2. Based on the high end of the IPO price range, that would value the company at about 38 times earnings.

Imperial Hotel Ltd., which runs one of Tokyo’s largest hotels, trades at 57 times earnings while East Japan Railway Co. (JR East), the nation’s biggest train line operator, is valued at 15 times, according to earnings forecasts released by the companies in January.

Seibu will set the final price for the IPO on Monday, and shares will begin trading on April 23, according to an earlier statement from the company.

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