Taxi-hailing app provider Go¡¯s shares surged 21% in its trading debut on the Tokyo Stock Exchange on Tuesday, helping to support investor sentiment after Japan¡¯s largest initial public offering so far this year.
It traded at ?2,910 after shareholders of the Goldman Sachs Group-backed company raised ?88.6 billion ($553 million) in the offering for a market value of ?186 billion last week. Investors have expressed interest for more than 25 times the shares offered, according to a person familiar with the matter.
International investors were allocated 70% of the offering, while 25% of shares were reserved for local retail investors and domestic institutions got 5%, the person said.
Global investors such as BlackRock, Wellington Management and M&G Investment Management have committed to buying shares, according to an English prospectus. More than 180 entities showed interest in the international portion and the tranche was about 20 times oversubscribed.
The successful debut offers a much-needed tailwind for Japan¡¯s IPO market. There have been 17 IPOs priced so far this year, the fewest since 2011, according to Bloomberg-compiled data. Total proceeds from these were just ?144 billion, the lowest since 2022.
Investors valued Go¡¯s dominant position in Japan¡¯s taxi app market, and see it as having room to raise commission fees as the service is expected to increase market penetration, the person said. That said, increased competition and regulatory changes are potential risks, the person added.
Go estimates it will post revenue of ?40.8 billion in the 12 months ending May 31, up about 30% from the previous fiscal year, the company said in a release. Operating profit is expected to rise to ?7 billion from ?2.7 billion.
The company manages the most widely used taxi booking app in Japan. Its competitors include Uber Technologies, China-based Didi Global and local provider S.Ride, in which Sony Group has invested. Goldman invested ?10 billion in 2023 in a deal valuing Go at ?135 billion.
The IPO price of ?2,400 suggests a price-earnings ratio of 29 times, which some analysts argue is not a cheap point to buy. ¡°We would wait for a post-IPO pullback to make an entry,¡± Shifara Samsudeen, an analyst at LightStream Research, said in a report published on SmartKarma.
Nomura Holdings, Goldman and Bank of America are the joint global coordinators of the offering.
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