PE-owned Kokusai Electric gains on debut after $720m Japan IPO
KKR-owned Kokusai Electric gained 28% on debut after raising JPY 108.3bn (USD 720m) in Japan’s largest IPO in five years.
The company sold approximately 58.8m shares for JPY 1,840 apiece, a slight discount to the planned price of JPY 1,890 per share, according to a filing. A further 8.8m shares could be sold under the overallotment option. All the proceeds went to KKR, which reduced its holding from 73.22% to 43.85%.
Kokusai Electric’s stock closed at JPY 2,350 on October 25, giving the company a market capitalisation of JPY 541.5bn. As of early trading on October 27, the stock was at JPY 2,537.
It is the largest IPO in Japan since C2C marketplace raised JPY 130.5bn in 2018, AVCJ Research’s records indicate. Mercari received substantial private funding prior to its listing.
KKR acquired Hitachi Kokusai Electric for JPY 322bn (then USD 2.9bn) in 2017, taking out controlling shareholder Hitachi and smaller investors through a tender offer.
The company repurchased a 51.67% stake held by Hitachi and it was then split in two, with KKR owning 100% of the thin-film division and 60% of the video and communication division. Hitachi and local private equity firm Japan Industrial Partners (JIP) each took 20% of the latter business.
KKR subsequently sold its position in the video and communication division to JIP, while Hitachi retained 20%. Earlier this year, JIP exited its position to electronics giant Nisshinbo Holdings for USD 136m.
The thin-film division – now called Kokusai Electric – specialises in high-productivity batch processing systems and services for memory, foundry and logic customers. Batch processing systems feature in the coating and thermal part of the semiconductor manufacturing process. The thinner the film, the greater the functionality of the semiconductor.
KKR agreed to sell the business to US-listed Applied Materials in mid-2019, with the deal size set at USD 3.5bn. However, the transaction collapsed in March 2021, with Applied citing an inability to obtain approval from Chinese authorities within an acceptable timeframe. It paid a USD 154m termination fee to KKR and remained a minority investor in the company.
Qatar Holding – a subsidiary of Qatar Investment Authority (QIA) – acquired a minority stake in Kokusai Electric in June for an undisclosed sum. This facilitated a partial exit for KKR. The sovereign wealth fund noted that Kokusai Electric is poised to benefit from rapid growth for semiconductor-enabled devices driven by demand from the likes of data centres and artificial intelligence (AI).
Applied and Qatar Holding owned 14.5% and 4.83%, respectively, prior to the IPO.
Kokusai Electric generated revenue of JPY 245.7bn in the 12 months ended March 2023, a nominal increase on the previous year. EBITDA dropped from JPY 80.6bn to JPY 66.4bn, while net profit fell from JPY 51.4bn to JPY 40.3bn.
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