Kokusai Electric trims indicative IPO pricing about 3%

By Sam Nussey, Makiko Yamazaki and Miho Uranaka

TOKYO (Reuters) -Japanese chip equipment maker Kokusai Electric on Tuesday trimmed the indicative pricing for its $730 million initial public offering by about 3%, which a source said partly reflected chip designer Arm’s lacklustre performance.

The indicative price range was set at 1,830-1,840 yen per share, KKR-backed Kokusai said in a regulatory filing on Tuesday, compared with 1,890 yen previously.

Kokusai said the lower range reflected the view of institutional investors and the state of the stock market.

The dull share price performance of SoftBank Group’s Arm since its listing last month was one of the factors behind the move, said a source familiar with the matter, who declined to be named because the information was not public.

If its IPO prices at the top of the range, Kokusai, which manufactures machines that deposit thin films on silicon wafers, will offer 108.3 billion yen ($729 million) worth of shares and have a market valuation of 423.9 billion yen, excluding an overallotment.

Capital Research and Management and Lazard Asset Management have committed to purchase shares at the offer price, Kokusai said in a separate filing.

Kokusai’s largest customers are Samsung Electronics, TSMC and Micron Technology, collectively accounting for more than 40% of its revenue.

Investors are assessing the outlook for chip demand amid a slump in the market for smartphones and personal computers, even as capital is flowing to companies seen as benefiting from investment in artificial intelligence.

Samsung’s profit is expected to slump 80% when it reports quarterly earnings on Wednesday, as rock-bottom memory chip prices recover more slowly than expected. Micron last month forecast a quarterly loss.

($1 = 148.5200 yen)

(Reporting by Sam Nussey, Makiko Yamazaki and Miho Uranaka; Additional reporting by Kaori Kaneko; Editing by Christian Schmollinger, Sonali Paul and Edmund Klamann)