Carlyle-Backed Rigaku Starts Trading Below IPO Price in Tokyo

Rigaku Holdings, the Japan-based X-ray testing tool maker, began trading on the Tokyo Stock Exchange on October 25, 2024, with its shares opening below the initial public offering (IPO) price. The company, backed by private equity firm Carlyle Group, priced its IPO at the top of the range, at 1,260 yen per share, raising 129 billion yen ($863 million). However, the stock opened at 1,250 yen, marking a 0.8% decline from the IPO price.


Rigaku's trading debut comes amidst a backdrop of mixed market sentiment and investor appetite for IPOs in Japan. While the Nikkei 225 index has gained around 18% year-to-date, the market suffered a selloff in early August due to a surprise interest rate hike and fears of a U.S. recession. Nevertheless, Tokyo Metro's IPO in October, the largest in Japan for six years, was more than 15 times oversubscribed, indicating strong demand for certain offerings.

Carlyle's involvement and Rigaku's global expansion plans played a significant role in the company's IPO pricing and trading debut. Carlyle acquired an 80% stake in Rigaku in 2021, with the aim of maximizing the company's corporate value and strengthening its brand. By partnering with Carlyle, Rigaku sought to capture global growth in the X-ray equipment market and list the holding company in the coming years. Carlyle's global expertise and network in Rigaku's various end markets were expected to create significant value for the company.


Rigaku's financials, market position, and growth prospects also contributed to its IPO valuation and subsequent trading performance. The company's annual revenue is approximately 44 billion yen, with around two-thirds generated outside of Japan. Rigaku's products analyze the composition and structure of various materials and are used in a wide range of science and technology applications. The company's diversified customer base, which includes academic and research institutions as well as blue-chip companies in industries such as semiconductors and pharmaceuticals, further bolstered its IPO prospects.

In comparison to other recent tech IPOs in Japan, Rigaku's valuation was relatively strong. The company priced its IPO at the top of the range, indicating robust investor demand. However, the initial trading performance suggested that investors may have been cautious about the company's prospects, as the stock opened below the IPO price.

Rigaku's IPO experience offers several lessons for other companies considering an IPO in the current market conditions. Despite strong IPO pricing, companies should be prepared for potential fluctuations in trading performance. Market sentiment and investor appetite can be volatile, and companies should be mindful of broader economic trends and geopolitical risks. Additionally, companies should leverage the expertise and networks of their investors, such as Carlyle, to maximize their growth prospects and achieve long-term success.

In conclusion, Rigaku's trading debut below its IPO price reflects the mixed market sentiment and investor appetite for IPOs in Japan. Carlyle's involvement and Rigaku's global expansion plans played a crucial role in the company's IPO pricing and trading debut. The company's financials, market position, and growth prospects also contributed to its IPO valuation and subsequent trading performance. As other companies consider IPOs in the current market conditions, they should learn from Rigaku's experience and be prepared for potential fluctuations in trading performance.