Japan Tweaks IPO Rules as Cancellations Peak

(Bloomberg) -- Japan’s IPO market is another victim of the coronavirus: Companies are canceling their listing plans like never before, and exchanges are doing their best to help.

As market swings surged and the Topix index plunged, seven initial public offerings got withdrawn in March, according to data compiled by Bloomberg. Among them is that of fitness-club operator Fast Fitness Japan Inc., which cited the virus-induced volatility as a reason for backing off.

To help companies coming under pressure from the coronavirus outbreak, the Tokyo Stock Exchange said it will be flexible with IPO applicants, while Japan Exchange Group Inc. said it will postpone a partial revision of the current listing rules.

“The exchange has done what it can to help companies that are still willing to be listed,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management. “However, the market has deteriorated and so have investors’ minds. Companies can only start preparing to go through the assessment for IPOs once market volatility calms down and the number of infection peaks out. That will be several months before IPOs resume.”

Still, 17 companies managed to go public in March, raising a total of $339 million, data compiled by Bloomberg show. But their debuts could hardly have come at a worse time. They lost 29% on average, weighted by deal size, more than the Topix’s 15% drop this month. Only logistics-services provider Kantsu Co., which got listed on Thursday, eked out a gain, more than doubling from its offer price.

Of course, Japan’s IPO market is not the only one suffering from the coronavirus fallout. Companies from India to Brazil and the U.K. have had to postpone listing plans as equity markets suffered some of their worst routs.

Read more: Market Chaos Derails Companies’ Trading Debuts

UPCOMING LISTINGS:

• InnoCare Pharma
  • Hong Kong exchange
  • Size $288m
  • Listing Mar. 23
  • Morgan Stanley, Goldman Sachs, UBS

• Zhangjiagang Elegant Home-Tech

  • Shanghai stock exchange
  • Size $112m
  • Listing date TBD
  • GF Securities
• Champ Resto Indonesia
  • Indonesia stock exchange
  • Size about $150m
  • Pre-marketing started Jan. 31
  • CLSA
• Mr D.I.Y. Group
  • Bursa Malaysia
  • Size up to $500m
  • Launch date TBD
  • CIMB, Maybank
• Lion Air
  • Indonesia stock exchange
  • Size over $500m
  • Pre-marketing Jan. 27-Feb. 7
  • BNP Paribas, Morgan Stanley

More ECM situations we are following:

• Thai Life Insurance Pcl has requested pitches from banks for an IPO that could raise as much as $700 million on the stock exchange of Southeast Asia’s second-biggest economy, according to people with knowledge of the matter.

See also:

• Asia ECM Weekly Agenda
• IPO data
• U.S. ECM Watch
• EU ECM Watch
• To receive the ECM Watch in your inbox daily, click the “subscribe” button at the top of this article

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