December 25, 2013 5:56 am JST

Japanese IPOs raised 380 billion yen in 2013

Employees of Human Metabolome Technologies and officials of the Tokyo Stock Exchange celebrate the firm's listing on the Mothers market.

TOKYO -- Companies that went public this year were able to procure 380 billion yen ($3.61 billion) on the market, the largest amount since 2006, on the back of a strong investor appetite fueled by highflying stock prices.

     Biotech firm Human Metabolome Technologies joined the Tokyo Stock Exchange's Mothers market on Tuesday as the final listing of the year. This has brought to 54 the total number of initial public offerings this year, the highest figure in six years.

     Both the number of IPOs and the amount raised have been recovering since bottoming out in 2009. The number of companies that listed their stocks this year rose almost 20% from 2012, and the procurement amount -- excluding secondary sales -- surged about 10-fold.

     The opening price exceeded the offering price in 52 of the IPOs as investors were bullish about the firms' growth prospects. On Tuesday, HMT opened at more than double its IPO price. In setting IPO prices, companies use share prices of similar businesses as a reference. Thus the bullish market has helped to push up the overall amount procured through IPOs.

     The trend has been good news for biotech companies, which face heavy upfront investments. Since the financial crisis of 2008, biotech companies have had a hard time attracting funds because of the relatively long span of time they need to become profitable. But the tide is turning. PeptiDream, which went public in June, was able to "secure a hefty sum for development," according to Chief Executive Officer Kiichi Kubota.

     Investors are carefully assessing growth strategies. Suntory Beverage & Food, which raised almost 300 billion yen through its IPO, decided to purchase beverage brands from a major U.K. drugmaker just two months after it went public. Investors welcomed the acquisition, sending the company's stock price up about 10% from the opening price.

     "Individual investors that made money on this stock bought other newly listed shares, creating a virtuous cycle," said an official at a major brokerage.

     About 70 companies are expected to go public next year. An official at Nomura Securities says that the amount the firms procure may grow if the market remains solid.

(Nikkei)