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U.S. private equity group KKR is planning an initial public offering of a chip equipment maker on the Tokyo Stock Exchange in the fourth quarter, in what would be the market’s largest IPO since 2018.
KKR aims to take Hitachi Kokusai Electric public, valuing it at 400 billion yen ($2.7 billion), according to two people familiar with the takeover group’s plans. The valuation is about 60 percent higher than what KKR paid when it was acquired from Hitachi in 2017 as part of the industrial conglomerate’s divestiture of non-core businesses.
Valuations of chip companies and their suppliers have since soared, with U.S. efforts to limit China’s access to advanced semiconductors underscoring the strategic importance of the technology in supply chains.
The IPO, which would be SoftBank’s largest since the 2018 listing of its telecom unit, with a market capitalization of 7.2 trillion yen, follows the tech group’s listing of chip designer Arm in New York this month, targeting a valuation of up to $52. billion.
KKR’s takeover of Kokusai comes as global private equity groups are emphasizing their enthusiasm for the Japanese opportunity — sentiment that remains low in Japan as deal funding in the U.S. and Europe becomes more expensive due to the influence of the central government. The central bank’s determination to stick to its ultra-loose monetary policy.
KKR recently suffered a setback with Marelli, an auto parts company it acquired from Nissan and rebranded. Magneti Marelli entered a court-led restructuring last year after suffering a sharp drop in sales during the pandemic. The sudden Magneti Marelli crisis has raised alarms among Japanese banks and damaged KKR’s reputation in the country.
People familiar with the IPO plans said the group intends to list International Jaipur during the November-December window, usually the busiest time of the year for listings, which bankers believe is a time for investment. Efforts by investors to market new shares were the most popular. wind. KKR declined to comment.
The listing comes amid a broad recovery in Japan’s IPO market, with the Topix index up more than 28% since the start of the year and now at multi-decade highs.
Ten companies plan to list in Japan this month, with another nine scheduled for October. Rakuten Bank raised $625 million in April, the largest IPO so far this year.
More companies are expected to list in Tokyo by the end of the year after companies were forced to delay initial public offering plans last year due to geopolitical uncertainty related to U.S.-China tensions, bankers said.
The IPO follows KKR’s attempt in 2019 to sell its chipmaking equipment business to Applied Materials.
The $3.5 billion deal fell through in 2021 after failing to win approval from Chinese regulators.
Additional reporting by Nicholas Megaw in New York
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