Business / Corporate

Recruit jumps in trading debut after ¥197 billion IPO

Bloomberg

Recruit Holdings Co. gained 7.4 percent on its first day of trading Thursday.

Recruit, the nation’s top provider of short-term workers, closed the session at ¥ 3,330, up from an initial public offering price of ¥3,100.

The Tokyo-based company raised ¥197 billion with its owners on Oct. 6 in Japan’s second-biggest share sale this year.

Chief Executive Officer Masumi Minegishi plans to use some of the proceeds for acquisitions both overseas and in Japan, where the government wants to allow more temporary employment to “boost competitiveness.”

The successful IPO follows a string of lackluster debuts in Japan, which saw companies’ shares fall an average of 10 percent from their offer prices when adjusted for deal size, data compiled by Bloomberg show.

“As the overall market slumps, investors’ attention seem to be drawn to Recruit,” Hiroaki Hiwada, a strategist at Toyo Securities Co., said after the start of trading. “With something this size, there’s a possibility it’ll be regarded as a benchmark for various IPOs.”

Prime Minister Shinzo Abe’s Cabinet is pushing to open more of the economy to nonpermanent employees as part of an effort to make Japanese companies more competitive and boost economic growth. The Cabinet has submitted a bill to the Diet that would change the Dispatch Worker Law to allow nonpermanent employees in all jobs, up from 26 currently.

Recruit provides temporary and permanent staffing to companies, and Internet information services on topics including travel, real estate and weddings. The company offered its shares at the top end of their marketed range, after initially going as low as ¥2,800 apiece, according to a filing with the Finance Ministry.

Recruit’s debut follows that of venerable restaurant operator Skylark Co., which fell 4.8 percent below its offer price on its first day of trading Oct. 9 after a ¥66.8 billion IPO.

Japan Display Inc. has lost more than half of its value since the company’s $3.1 billion public offering in March, falling 15 percent on the first day. The maker of mobile-device screens for Apple Inc. forecasted a surprise annual loss because of delayed shipments, according to a person familiar with the matter. The company’s stock plunged as much as 18 percent.

Recruit forecasts net income of ¥66 billion for the year through next March, up 0.9 percent from a year earlier, according to a statement last month. It expects revenue to increase 8.3 percent to ¥1.3 trillion.

“Investors are expecting Recruit to further expand their global staffing-service operation on one hand, and the other pillar of their business, information services,” Yasuhide Yajima, chief economist at NLI Research Institute in Tokyo, said before the stock’s trading debut. “Recruit’s been offering a wide range of information and value-added services to meet consumers’ demand.”

Morgan Stanley, Nomura Holdings Inc., Bank of America Corp., Mizuho Financial Group Inc. and SMBC Nikko Securities Inc. were the lead underwriters for the offering.

Recruit, founded in 1960, grabbed unwanted international attention more than a quarter century ago when it was embroiled in a political-donation scandal that brought down the government of Prime Minister Noboru Takeshita. At the center of the storm were charges of shares for favors tied to the IPO of a Recruit unit.

A 1990 court ruling established that shares of Recruit Cosmos Co., a real estate unit, were distributed as bribes before it went public. The ensuing public disenchantment with the money-raising practices of the dominant Liberal Democratic Party helped to usher in a period of political realignment that for a time saw the LDP lose power.

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