Monex , a 10-month-old Japanese online stock broker, made a roaring debut Friday on the Tokyo Stock Exchange's "Mothers" market for high-growth stocks, becoming the first Japanese online brokerage firm to go public. The company also conducted what it called "the world's first major Web-based IPO," issuing more than half of the new shares to individual investors online.
Shares of Monex closed at 68,300 yen ($US628.10) up 41 percent from their initial offering price of 45,000 yen, bucking Tokyo's recent weak market trend.
Tokyo's benchmark Nikkei average tumbled almost 10 percent in July because of the failure of retail giant Sogo, declines on the U.S. Nasdaq and some mediocre Tokyo IPOs in recent months.
Oki Matsumoto, the 36-year-old President and Chief Executive Officer (CEO) of Monex, says the company didn't worry about the timing of the IPO. "The market sentiment can be changed in a day," he said. "It's irrelevant to think about when you bring your company public."
J.P. Morgan, which owns a 5.33 percent stake in Monex, was the sole lead manager for the listing, becoming the first foreign financial brokerage to play a leading role in a Japanese IPO. Monex sold 150,000 new shares at an IPO price, raising 6.2 billion yen after fees. It says it plans to use the funds to strengthen its capital base, invest in its trading system and expand into underwriting.
The company's initial success is attributed to two factors that many previous Net IPOs in Japan have lacked - an affordable IPO price and liquidity. Monex, 36.62 percent owned by the media and electronics giant Sony Corp., managed to issue 1.43 million shares -- an exceptionally large number for a Japanese startup -- and set the IPO price low by issuing no par-value shares. As a result, on Friday, Monex's trading volume reached 29,352, while nine of its 13 Mothers-listed counterparts had either low trading volume of less than 100 or had no trading at all.
Unlike many dot-com companies in the U.S., Monex does not have to burn its budget on advertisement because of its affiliation with a top-notch brand name, Sony, which helps boost its credibility. Japanese consumers tend to get attracted to products and services with strong brand images, even if they are not the cheapest options. Also, Matsumoto himself has a solid brand image and market experience. He became the youngest partner at Goldman Sachs six years ago at the age of 30.
Going public could give Monex a head start in surviving among dozens of online brokerages in Japan. Monex, which has about 80,000 clients, started its business last October when Japan liberalized brokerage commissions, and it has become one of the top-five online brokerages in Japan. In the most recent fiscal year ended March 31, the company posted a net loss of 807 million yen ($US7.4 million).
Monex's rival ETrade Japan, a unit of Japan's largest Internet investor Softbank, had about 90,000 accounts at the end of May, the most recent data available. Other competitors have an eye on potential IPOs, including Nikko Beans, a unit of Nikko Securities, DLJ direct SFG Securities, established by Sumitomo Group and DLJdirect, a unit of Donaldson, Lufkin & Jenrette, and H.I.S. Kyoritsu Securities, a unit of Japanese discount travel agency H.I.S.