[Summary]
Japan's large-scale IPOs are quite different from the US-style market where "fast-growing tech companies obtain growth capital by going public." Historically, the market has been characterized by the release and reorganization of assets of national/public infrastructure and large groups such as NTT, JR, JT, Japan Post, and Tokyo Metro.
On the other hand, in the growth market, problems with small-sized listings and listing goals have continued. According to the TSE's 2025 data, IPOs with a market capitalization of less than 10 billion yen and a funding amount of less than 1 billion yen account for 57% of growth-listed companies from 2018 until September 2024. Since 2018, approximately 60% of IPOs have had an offering amount that exceeds the amount raised.
The focus from now on is whether we can return IPOs to the ``entrance of post-listing growth'' rather than the ``exit''. The Tokyo Stock Exchange reform, the review of standards for maintaining listings in the growth market, the government's startup development policy, and the rise of national strategic deep tech such as semiconductors, space, defense, quantum, and nuclear fusion are beginning to shape the next landscape of the Japanese IPO market.
First, the conclusion
When looking at Japan's IPO market, it is not enough to simply list the "large-scale deal rankings."
This is because many of Japan's mega-IPOs were events that released huge assets held by the state, parent companies, and existing shareholders into the market, rather than supplying risk money to growing companies.
NTT, JR, JT, Japan Post, Tokyo Metro. All of these businesses include life infrastructure, communications, railways, finance, and businesses with strong public interest. Investors bought stable earnings, dividends, and national recognition rather than dream growth stocks.
This is the difference from a US IPO.
In the US, companies such as Google, Meta, Snowflake, and Databricks that raise huge sums of money while unlisted and then continue to dominate the global market after going public tend to take center stage. In Japan, ``release of mature infrastructure'' and ``EXIT of small startups'' have coexisted for a long time.
However, this structure is beginning to change.
The TSE is moving in the direction of encouraging IPOs that lead to high growth after listing. From March 1, 2030, the criteria for maintaining listing on the growth market will be revised to a market capitalization of 10 billion yen or more after five years of listing. We have entered an era in which IPOs are no longer a matter of ``winning if you can get listed,'' but ``the responsibility of growing a company to a size that can be purchased by institutional investors after listing.''
Large-scale IPOs in history have a strong tendency to release assets
If we look at representative examples of large-scale IPOs in Japan from the perspective of initial market capitalization or size at time of listing, we can see quite clear characteristics. The numbers vary depending on the materials and calculation methods, but the genealogy is as follows.
| Stock | Listing period | Size | Meaning in the market |
|---|---|---|---|
| NTT (9432) | February 1987 | Initial market capitalization approximately 25 trillion yen | Release of government-held stocks to the market. A symbolic event in the Japanese capital market |
| NTT Docomo | October 1998 | Initial market capitalization approximately 8.8 trillion yen | Mobile communications spin-off from the NTT Group. NTT will become a wholly owned subsidiary in 2020 |
| Japan Post Bank (7182) | November 2015 | Initial market capitalization approximately 7.6 trillion yen | Core of postal privatization. Collect personal funds as a high dividend/financial infrastructure stock |
| Japan Post (6178) | November 2015 | Initial market capitalization approximately 7.3 trillion yen | Post Group holding company. Correcting low PBR and capital efficiency are issues |
| SoftBank (9434) | December 2018 | Initial market capitalization approximately 7 trillion yen | Telecommunications subsidiary separated from SBG. A super large project with an absorption amount of approximately 2.6 trillion yen |
| JR East (9020) | October 1993 | Initial market capitalization approximately 2.4 trillion yen | Symbol of JNR privatization. From railways to real estate, in-station areas, and the Suica economic zone |
| JT (2914) | October 1994 | Initial market capitalization approximately 2.38 trillion yen | Privatization of monopoly public corporation. Transforming into a global tobacco company through overseas M&A |
| Recruit HD (6098) | October 2014 | Initial price market capitalization approximately 1.8 trillion yen | Unusually large-scale listing for a private company. Expanding with overseas HR tech such as Indeed |
| Shinsei Bank | February 2004 | Initial market capitalization approximately 1.77 trillion yen | Relisted after the bankruptcy and nationalization of the former LTCB. Delisting in 2023 |
| Japan Post Insurance (7181) | November 2015 | Initial market capitalization approximately 1.76 trillion yen | One of the three postal companies. The theme is to restore trust and improve operational sophistication |
The main players in this table are mostly privatizations, parent-child listings, financial restructuring, and separations of large groups.
In other words, large-scale IPOs in Japan have developed as ``events that redistribute existing huge assets in the market to determine who owns them'' rather than ``a market for discovering future high-growth companies.''
Therefore, the perspective of investors is also different from SaaS IPOs in the United States.
It's not just TAM and ARR that you look at. Dividend yield, additional sales of government-held stocks, parent company equity, index inclusion, individual investor demand, income fund purchases, and lock-up release. The larger the IPO, the more the stock price is determined not only by business growth but also by supply and demand and capital policy.
Recent large-scale IPOs are a mix of “infrastructure release” and “industrial restructuring”
Tokyo Subway in 2024, Kioxia Holdings, is a good representation of the Japanese IPO market in recent years.
Tokyo Metro (9023) will be listed in October 2024, and its market capitalization based on the initial price is approximately 950 billion yen. This is a case in which the national government and the Tokyo Metropolitan Government sold half of their holdings, and is a typical release of infrastructure assets to the market.
On the other hand, Kioxia HD (285A) was listed in December 2024. The market capitalization based on the public price is approximately 784 billion yen, and the market capitalization based on the initial price is approximately 776.2 billion yen. This is semiconductor memory, an industry with a strong national strategy, but at the same time, it also has the context of business restructuring and fund exits that continued from the former Toshiba Memory.
| Project | Character | Points seen by investors |
|---|---|---|
| Tokyo Metro | Release of public infrastructure to the market | Stable income, dividends, preferential treatment, urban transportation infrastructure |
| KIOXIA | Semiconductor restructuring/fund EXIT | NAND market conditions, AI storage demand, finances, supply and demand |
| Softbank | Separation of telecommunications subsidiary by parent company | High dividends, telecommunications infrastructure, monetization of SBG |
Large-scale IPOs in recent years have been a mix of ``exit for existing shareholders,'' ``industrial restructuring,'' and ``large-scale sales to individual investors,'' rather than pure growth financing.
If you don't look at this, you will misread the initial price of a large IPO or the stock price after listing.
The initial price of large IPOs is difficult to increase.
When you hear the word IPO, you may imagine that the initial price is much higher than the public offering price. If the project is small and has a popular theme, this may be the case.
However, super large IPOs are different.
The reason is simple: supply and demand are heavy.
| Factors | Impact on stock price |
|---|---|
| Absorption amount is large | Absorbs hundreds of billions of yen to trillions of yen from the market |
| High sales ratio | It looks more like cash out of existing shareholders than growth funds |
| Many mature businesses | Income funds tend to be the focus rather than short-term growth funds |
| Large individual allocation | Profit-taking selling after the initial price is likely to occur |
| Shares held by the parent company and government remain | Be aware of overhang from additional sales |
SoftBank's listing in 2018 is a typical example. The amount absorbed was approximately 2.6 trillion yen, one of the largest ever, but the initial price was lower than the public price.
In large-scale IPOs, while the higher the name recognition, the easier it is to sell, the supply-demand balance becomes heavier after listing. It doesn't go up because it's popular, it sells in large quantities because it's popular. Here's the irony.
Another problem in the Japanese IPO market is “small listings”
If large-scale IPOs are an asset release type, there is another problem on the growth market side.
It is listed as a small grain.
According to the TSE's April 2025 IPO collaboration meeting materials, 57% of the growth companies listed from 2018 to September 2024 will be IPOs with a market capitalization of less than 10 billion yen and a funding amount of less than 1 billion yen.
The same document also shows that since 2018, approximately 60% of IPOs have had an offering in which the offering exceeded the amount raised.
This is a pretty heavy number.
This is because the structure indicates that an IPO is more likely to be used as an exit for existing shareholders, rather than as a way to raise funds for growth investments.
Of course, it is not a bad thing for VCs and founders to sell some of their business. There is a need for an exit for investors who have taken the risk to recover.
The problem is that the size of the company at the time of listing is small, the amount raised is small, and after listing, the company remains in the market without becoming an investment target for institutional investors.
Liquidity is weak. Market capitalization is not growing. Growth investment will not continue. IR is also weak. As a result, stock prices sink after listing, leaving only individual investors behind.
This is the so-called listed goal problem.
TSE reform will also have an effect on the IPO market
When it comes to TSE reform, the demands placed on companies with PBR below 1x tend to get attention.
However, the IPO market is also being affected.
Starting in March 2023, the TSE will require companies listed on Prime Standard to manage their businesses with an awareness of cost of capital and stock prices. This is not just a story for existing listed companies. Newly listed companies are also being asked about capital efficiency, growth investment, IR, and shareholder dialogue immediately after listing.
Furthermore, in the growth market, standards for maintaining listing will be reviewed.
From March 1, 2030, the market capitalization standard for growth markets will be revised to 10 billion yen or more after 5 years of listing. This is much stricter than the current requirement of 4 billion yen or more after 10 years of listing.
The message is clear.
If you are going to go public, develop it after going public.
The TSE no longer tolerates companies remaining listed as small companies. The growth market should be a market for companies that grow to a size that institutional investors can buy.
Can we return from the EXIT market to a growth market?
Japanese startup IPOs have long functioned as an exit market.
It is difficult to raise large amounts of funds at the unlisted late stage stage. Large VC rounds and secondary markets are not as strong as in other countries. Therefore, companies go public at a relatively small stage, and then the founders and VCs take the exit.
This structure isn't all bad. The ability to go public quickly has opened up opportunities for individual investors to invest in start-up companies.
However, the side effects were also significant.
| Problems with traditional IPOs | Likely outcomes |
|---|---|
| Small scale at time of listing | Difficult for institutional investors to buy |
| Small procurement amount | Weak growth investment after listing |
| High sales ratio | Looks like a strong exit trend |
| Weak disclosure/IR | Stock prices tend to be neglected |
| Low liquidity | Stock price collapses with a small sell |
From here on, you can either grow the company significantly before going public, or continue investing for true growth after going public.
Rather than "We were able to go public," we asked ourselves, "What will change after going public?" The market is starting to see that.
Will the next leading role be national strategic deep tech?
The next major player in the Japanese IPO market will not be limited to traditional light SaaS and web services.
The government's five-year start-up development plan, economic security, semiconductor support, strengthening the defense industry, space policy, and energy transition have all coincided, and there is a growing trend for national strategic deep tech to enter the capital market.
The candidate area is wide.
| Area | Implications in the IPO market |
|---|---|
| Semiconductor/AI infrastructure | Domestic supply chain, data center, advanced packaging |
| Space | Satellites, rockets, earth observation, space data |
| Defense/Security | Dual-use, Cyber, Unmanned Vehicles, Communications |
| Quantum | Quantum computing, cryptography, sensing |
| Nuclear fusion/next-generation energy | Long-term funding, state support, R&D investment |
| Biomanufacturing | Drug discovery, materials, food, climate change response |
However, deep tech IPOs are not easy.
The research and development period is long. The deficit period is also long. Capital investment is heavy. There are technical risks. It also depends on policy support. If a company goes public before sales are made, it can easily become a difficult product for individual investors.
That's why public pricing, global offerings, post-listing financing, and dialogue with institutional investors are important.
If Japan really wants to foster deep tech in the capital market, IPO should not be the goal. Even after listing, a long development cycle must be supported through a combination of capital increases, corporate bonds, joint development, government support, and funds from foreign investors.
What investors should look for
When looking at future IPOs, it is dangerous to only follow the initial price.
Especially for large IPOs and deep tech IPOs, you should look at the following items.
| Items to see | Why it's important |
|---|---|
| Ratio of public offering to secondary offering | Is it growth capital or an exit for existing shareholders |
| Absorption amount | Measures the weight of initial price supply and demand |
| Lockup | See additional selling pressure after listing |
| Parent company/government ownership ratio | Overhang due to additional sales |
| Use of proceeds | Will it be used for growth investment |
| IR after listing | Is the company capable of dialogue with institutional investors |
| Growth market standards | Can market capitalization grow to over 10 billion yen |
| Research and development funds | See the risk of running out of funds in deep tech |
An IPO is not just an event on the day of listing.
What really matters is whether market capitalization, sales, profits, capital efficiency, and liquidity are growing three or five years after listing.
Summary
The Japanese IPO market has two histories.
One is the release of national assets and infrastructure, such as NTT, JR, JT, Japan Post, and Tokyo Metro, to the market. Here, stable earnings, dividends, supply and demand, and additional sales are more important than growth potential.
The other is small-sized listings and EXIT marketization in growth markets. Issues here include lack of growth after listing, lack of liquidity, and absence of institutional investors.
The changes that are occurring now are corrections to both.
The TSE reform not only requires existing listed companies to increase capital efficiency, but also requires IPO companies to "responsibly grow after being listed." The growth market's market capitalization standard of 10 billion yen is a symbol of this.
The next focus is whether we can foster national strategic deep tech in the capital market.
Whether the Japanese IPO market will really change is not determined by whether the initial price increases. How many companies can we create that can compete on the global stage after going public? The next rating of the Japanese capital market depends on this.
Source
- Snapup Investment Advisors, Market capitalization ranking at time of listing (Japanese large IPOs)
- IPO Navi, IPO market capitalization ranking
- Japan Exchange Group “IPO Collaboration Conference Materials 2”, 2025 Publication Materials
- Japan Exchange Group, Details of market capitalization listing maintenance criteria
- Japan Exchange Group, [Regarding the publication of key points and examples of "management that is conscious of capital costs and stock prices" from an investor's perspective] (https://www.jpx.co.jp/news/1020/20240201-01.html)
- Ministry of Economy, Trade and Industry, Startups and new businesses
- Asahi Shimbun, Tokyo Metro listed as the strongest private railway, market capitalization 950 billion yen sold by country and capital
- EE Times Japan, KIOXIA listed on TSE Prime Market with market capitalization of 776.2 billion yen