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Stocks

Tech newcomers help keep Japanese IPOs brisk

Nearly all first-half debutantes trading above offering price

TOKYO -- Japanese initial public offerings totaled 39 for the first half of 2017, remaining at a high level thanks to a bullish market for emerging companies.

Within the last decade, that tally is surpassed only by January-June totals from 2015 and 2016, which saw 43 and 40 IPOs, respectively. Many of these companies list on the Tokyo Stock Exchange's Mothers market.

Many in the new IPO crop put a unique tech spin on services. Tsunagu Solutions, which listed last Friday, builds websites to recruit part-time workers. Tabikobo, which debuted in April, advertises and sells custom vacation packages.

In addition, "many new listings are companies that offer B2B services," such as direct mail surrogate DM Solutions, said Tomohiro Suzuki of KPMG Azsa.

Newly listed companies have been popular among investors. From January through June, 35 new issues debuted above their IPO price. Most have remained remained firm, with 37 out of 39 closing above their IPO price on Monday. Enterprise software developer bBreak Systems closed at 3.7 times its offer price, while virtual desktop provider Ascentech had tripled. Tsunagu and Tabikobo had more than doubled from their IPO prices.

The pace of new listings is likely to continue in the second half of the year, led by information-technology-related companies. About 80 to 90 IPOs are expected for all of 2017. The total could surpass last year's 83 and approach the 2015 tally of 92, the most in the last decade. "Listings of companies that use technology to offer solutions for optimizing business operations are getting attention," said Toshio Isohashi of Mitsubishi UFJ Morgan Stanley Securities.

Japanese IPOs are unlikely to recover to levels seen before the 2008 financial crisis, however. In 2006, IPOs hit an all-time high of 93 for the first half and totaled a still-high 188 for the entire year.

IPOs are brisk overseas as well. New listings for the first half of 2017 totaled 871 worldwide, jumping 67% on the year to the most since 2007. U.S. and Chinese names numbered prominently in the crowd.

(Nikkei)

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