Kokusai Electric, a Japanese semiconductor equipment maker, experienced a robust debut on the Tokyo Stock Exchange, with its shares reaching as high as 32% above the IPO price of 1,840 yen. The IPO involved the sale of approximately 58.8 million shares, raising a total of 108 billion yen and valuing Kokusai Electric at around 424 billion yen. This marks Japan’s largest listing since SoftBank’s 2.4 trillion yen listing in December 2018.
Kokusai Electric, a spin-off from Hitachi Kokusai Electric, was acquired by American private equity firm KKR in 2018 for $2.2 billion. The company’s business segments primarily focus on memory chips, but Mio Kato, founder of research firm Lightstream Research, expressed a mixed view on the stock. While he noted that the stock is “exceedingly cheap” based on historical numbers, he raised concerns about Kokusai Electric’s competitiveness compared to rivals like Tokyo Electron and Lasertec.
Kato highlighted that Kokusai Electric’s business is primarily geared toward memory chips, which are under pressure as applications like artificial intelligence increasingly use logic chips instead of memory chips. He suggested that if smartphone volumes stagnate, it could put pressure on overall memory volume growth. While acknowledging the positive early response to the IPO, Kato cautioned about a potential overhang on the share price in the medium term. KKR still holds about 110 million shares after the IPO, and it could consider selling them after the 180-day lock-up period.
Despite early exuberance, Kato emphasized the potential downside pressure on the stock in the future, depending on KKR‘s strategy regarding its remaining shares. The successful deal, however, reflects well on KKR’s performance in the transaction.
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