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Business Trends

Japan's IPO rush continues after Mercari debut

June and July see 21 companies going public, including unicorn MTG

Helping drive MTG's success is its Sixpad brand training gear.

TOKYO -- Startups in Japan are going public in increasing numbers this year, with 21 initial public offerings in June and July alone, easily surpassing last year's 11 for the same period.

Following the June 19 IPO of flea market app operator Mercari on the Tokyo Stock Exchange's Mothers market, investors are eyeing startup markets closely.

Mercari's offer price was 3,000 yen ($27.39), but opened at 5,000 yen and briefly touched 6,000 yen, driving the company's valuation to a market high of more than 700 billion yen -- about three times bigger than that of smartphone game developer Mixi.

Commenting on Mercari's successful debut, one retail investor in Japan said he lost out on the unicorn's IPO lottery despite having five brokerage accounts. Only about one in 50 investors won the drawing.

MTG, one of Japan's two remaining unicorns, is scheduled to go public on July 10. Though yet to be fixed, the offer price is set between 5,290 yen and 5,800 yen. Even at the low end, valuation at the time of listing will top 200 billion yen, trailing only Mercari and Mixi.

Founded in 1996, MTG designs and sells private-brand products in collaboration with universities, medical institutions and athletes. Its platinum ReFa electric beauty roller has sold more than 7 million units since its release in 2009, while its Sixpad abdominal muscle gear has sold more than 1 million units. The brand is partnering with Real Madrid soccer star Cristiano Ronaldo on development of the gear. MTG does not have its own manufacturing plants.

Other prominent startups due to go public are Logizard, provider of cloud-based inventory control systems for brick-and-mortar and online retailers, and AI, a Tokyo-based developer of speech synthesis technology. AI's speech engine features 17 voices, allowing it to make announcements in more than 36 languages.

SoftBank Group is also joining the rush, with its mobile phone unit SoftBank expected to go public in July. In January, the group announced plans to list the unit's shares on the TSE's first section. The company hopes to raise about 2 trillion yen, which would make it this year's biggest IPO. But having its parent company listed on the same index has drawn criticism from foreign investors.

Also primed for an IPO will be Japan's last unicorn, Preferred Networks, a developer of technology for deep learning in artificial intelligence. The Tokyo-based startup has already partnered with Toyota Motor, Nippon Telegraph and Telephone, Fanuc and Hitachi. The company's leading-edge AI technology has driven its valuation to what is thought to be more than 200 billion yen.

Preferred Networks, whose AI technology is found in this industrial robot from Fanuc, will be Japan's last unicorn after MTG goes public next month.

Investors are also eyeing 100-yen store operator Daiso Industries. A spokesperson said the company is considering listing its shares, but has yet to make a decision. Daiso operates more than 5,000 stores worldwide. Founder and Chairman Hirotake Yano told reporters last year that the company is preparing to go public. In March, Yano handed the reins to his second son, Seiji Yano, to focus on strengthening corporate governance.

The weighted average IPO index -- which indicates stock price movements of companies that debuted over the past twelve months -- is at a 12-year high. "The index has been lifted by companies that recently debuted in the small- and mid-cap stock markets," said Go Saito of SMBC Nikko Securities.

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