Over the final two weeks of 2020 — a fortnight in which US and European equity markets may be relaxing into holiday mode — their Tokyo counterparts will be shifting into a historic listing overdrive.
There is a dazzling array of new companies coming to market, with businesses ranging from AI and ecommerce platforms to gyms and haircare products. But brokers say all eyes will be on a single fintech name: a fully-automated asset management and robot advisory platform for retail investors called WealthNavi.
The IPO, scheduled for December 22 and expected to value the company at ¥45bn-¥65bn ($430m-$620m), will be the first of a fintech asset management platform in Japan.
WealthNavi has attracted a relatively young customer base, and its success comes amid a broader Japanese embrace of online financial products and platforms that is itself driving the new wave of IPOs.
The lead manager of the WealthNavi listing, which is expected to be among the country’s biggest this year, is SBI Securities — one of WealthNavi’s largest shareholders and an aggressive online brokerage that wants to challenge Japan’s traditional giants, Nomura and Daiwa.
The extraordinary spree of IPOs is partly a release of capital-raising pressures pent-up over a year of uncertainties, and partly a response to a sustained rally in smaller growth stocks. The TSE Mothers market for start-ups rallied to a 14-year high in mid-October — 148 per cent higher than its year low in March.
JPX group — owner of the Tokyo Stock Exchange, the Mothers market and Jasdaq — says that 25 companies will carry out initial public offerings between December 15 and December 29. If the current schedule holds, the year will end with a 13-year high of 102 listings.
Three companies are listing on Christmas Day alone, and, most significantly for online brokerages such as SBI, Rakuten and Monex, all but a small handful will make their debut on Mothers — by some way the favourite hunting-ground of Japan’s growing army of retail investors trading through online platforms.
In what the CEO of one online brokerage described as a “coming of age” moment, online account openings in Japan surged by around 1m over the first six months of 2020, increasing the potential demand for new issues, especially in areas seen as new frontiers of technology.
A large part of WealthNavi’s appeal to customers — many of whom are now likely to become shareholders through the IPO — has been its offer of diversification. It offers a much wider range of asset types and geographies than the big, traditional brokerages.
Since the Bank of Japan’s negative interest rate policy was first introduced in 2016, Japanese savers have seen ever greater urgency in the search for yield — even when that has caused them to look internationally.
The company has also been busy forming partnerships within Japan’s existing financial services industry. In 2017, it formed a partnership with Sony Bank, and more recently with Okasan Securities.
In its biggest coup, the company in August announced a business alliance with Japan’s largest megabank, MUFG. The service will offer MUFG customers automated recommendations on asset allocation, tax optimisation and other financial advice.
Quick Fire Q&A
Company name: XTransfer
When founded: 2017
Where based: Shanghai
What do you sell, and who do you sell it to: We provide a payments platform for small and medium-sized enterprises (SMEs) in China that enables them to trade with the rest of the world.
How did you get started: SMEs were underserved by traditional banks and we wanted to solve the financial pain points facing smaller Chinese exporters.
Amount of money raised so far: $25m
Valuation at latest fundraising: N/A
Major shareholders: Telstra Ventures, MindWorks Ventures, eWTP Fund, China Merchants Venture Capital, 01VC, Yunqi Partners, and Gaorong Capital
There are lots of fintechs out there — what makes you so special: Never before has an AI-driven risk management platform been able to connect China’s SMEs with the international banking community.
Further fintech fascination
Follow the money: US insurtech companies are attracting plenty of attention. Reuters reports that Hippo Enterprises, a home insurance technology company, has pulled in a $350m investment from Japanese insurer MS & AD. Meanwhile, TechCrunch says that Metromile, which specialises in pay-by-the-mile car insurance, is to float in New York via a special purpose acquisition company.
Wirecard fallout: The Financial Times reports on the continuing repercussions of the Wirecard collapse. In a string of developments over the past week, the German audit watchdog told prosecutors that EY may have acted criminally during its work for the company. It also emerged that the same body is investigating Deutsche Bank’s head of accounting, Andreas Loetscher, over work he did in his previous role at EY where he was one of the partners responsible for the Wirecard audit.
Crypto chronicles: The Financial Times says that Libra, the Facebook-led digital currency, is set to launch as early as January — but in a limited format. The Libra Association had originally planned to launch several currencies, but that plan has been scaled back to just one initially, with others to follow later.
AOB: Ian Rogers, the chief digital officer of luxury group LVMH, is to join a French fintech start-up called Ledger, reports the Financial Times; Poland’s largest insurer, PZU, has teamed up with Tractable to streamline motor claims, says altfi; UK payments fintech Primer has raised £14m from investors including Accel, according to TechCrunch.
Get alerts on IPOs when a new story is published