Nomura Holdings Inc. expects initial public offerings to double to their highest level in 17 years as the resurgent stock market attracts investors to entrants, including Japan Post Holdings Co.
The value of debut share sales in the nation may exceed ¥2 trillion in 2015, Nomura IPO head Hiroshi Yoshihara said in a recent interview in Tokyo. Nomura is Japan’s biggest equity underwriter.
As many as 100 Japanese companies are preparing to sell shares this year, he said, up from 77 in 2014.
Yoshihara pledged to boost Nomura’s performance as a manager of IPOs following the firm’s role in the nation’s worst-performing major sale of 2014. Japan Display Inc., the company involved in that listing, has tumbled about 49 percent in value since its March 19 listing, prompting investors to criticize Nomura’s handling of the deal.
“We got a dressing down, especially from individual investors,” said Yoshihara, 51. “We’ll make sure we bring deals to the market properly so investors have faith in share sales that carry the Nomura stamp.”
The benchmark Topix index closed Tuesday at its highest level since December 2007, a day after a government report indicating that the economy had emerged from recession in the third quarter of fiscal 2014. Swings in oil prices and a standoff between Greece and eurozone countries has spurred unrest in financial markets worldwide this year.
“Investors have a strong appetite for debut companies,” Yoshihara said. “Even though the market’s pretty volatile, the trend will remain because investors believe the shares will rise as profits grow.”
About 90 to 100 Japanese companies, including smartphone software makers, information-technology providers and drug research ventures, are preparing to sell shares, Yoshihara said.
Offerings totaling more than ¥2 trillion would be the highest since 1998, when NTT Docomo Inc. went public with a ¥2.1 trillion sale, according to data compiled by Bloomberg.
Line Corp., the operator of the nation’s most popular mobile messaging service, is working with Nomura and Morgan Stanley to prepare for an IPO that could value the company at more than ¥1 trillion, sources with knowledge of the matter said last year.
Excluding real estate investment trusts, 77 companies made first-time offerings in 2014, valued at a total of ¥989 billion, data compiled by Bloomberg shows. Japan Display was the biggest, with Goldman Sachs Group Inc. and Morgan Stanley managing the sale alongside Nomura.
The maker of mobile-device screens cut its operating profit forecast six weeks after its March listing, triggering a 16 percent decline in its share price in a single day.
In October, the company announced further losses due to delayed shipments, sparking another 18 percent plunge.
The stock lost 59 percent of its value in 2014, becoming one of the 10 worst performers in the Topix, which climbed 8.1 percent. Japan Display has since gained 24 percent, closing at ¥457 on Tuesday.
Nomura shares rose 0.2 percent, paring this year’s decline to 1.3 percent after dropping 15 percent in 2014.
“Improving quality is the most critical thing this year — that’s what my work is all about,” Yoshihara said, without elaborating on specific measures he would take. “We have to know the company, talk to the top executives and review the firm’s business plan thoroughly.”
Nomura was Japan’s No. 1 IPO underwriter in the past two years. Morgan Stanley’s joint venture with Mitsubishi UFJ Financial Group Inc. was second last year, followed by SMBC Nikko Securities Inc., Mizuho Securities Co. and Goldman Sachs, the data show.
Nomura’s quest to stay at the top got a boost after the Finance Ministry chose it to lead the global offering of Japan Post, the government-owned banking and insurance giant. Goldman Sachs, JPMorgan Chase & Co. and Mitsubishi UFJ Morgan Stanley Securities Co. are also global coordinators of the sale.
Japan Post and its banking and insurance subsidiaries plan to list their shares on the Tokyo Stock Exchange sometime between September and December, Chief Executive Officer Taizo Nishimuro said last month. Nishimuro expects the sales to raise ¥1 trillion to ¥2 trillion.
“This could be Japan’s biggest privatization deal,” Yoshihara said. “I prayed for its success at the start of the year.”
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