Cerberus-backed Seibu gains 11% on trading debut

The company's scaled back IPO - which prompted Cerberus to abandon plans to exit nearly half of its stake - raised JPY547 billion ($5.3 billion) after pricing shares at JPY1,600 apiece. The stock ended its opening day at JPY1,770 for a 10.6% gain, also outperforming the 1.1% jump in the Nikkei 225 Index.

The price fell back to JPY1,735 on Thursday, a 1.98% drop.

Initial guidance put the offering price at JPY2,300 per share but a weak investor response resulted in a revised indicative range of JPY1,600-1,800 per share. Cerberus was planning to reduce its 35.48% stake by around 15.5% but then dropped out, deeming the new price too low.

The IPO was also expected to draw a line under a three-year row between the Seibu management and the firm's PE-backers. Relations between the two soured in 2011 following disagreements over the timing and pricing of the IPO. The company planned to list in late 2012 but was held up because Cerberus wanted a higher valuation than that favored by management.

Seibu had delisted from the Tokyo Stock Exchange in 2004 following a scandal over misstating stakes held by shareholders in contravention of exchange rules. Cerberus paid $802 million for a 29.9% stake in the company in 2006, participating in a $1.2 billion bailout alongside Nikko Principal Investments.

Cereberus then raised its stake to 35.48% in June last year following an unsolicited public tender, although it fell short of its 44.7% target.

The tender offer had been sparked by moves from Seibu to sever formal ties with the firm. Cerberus then tried to assert more control over the Seibu management by having eight new directors appointed to the board but efforts were voted down by shareholders at the company's annual meeting.

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• Topics
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