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Last updated: October 24, 2005 4:35 pm

Sumco prepares for largest IPO

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Sumco, the world’s second largest maker of silicon wafers, on Monday said it planned to raise up to Y143.95bn (US$1.24bn) in Japan’s largest initial public offering this year.

The listing of Sumco, a 50-50 joint venture between Mitsubishi Materials and Sumitomo Metal Industries, would be the largest since Inpex, the oil developer, raised Y159.83bn last November. It would exceed that of Jupiter Telecom, which raised Y104.72bn in March.

Sumco set a price range of Y2,900-Y3,300 a share for the IPO and will list on the Tokyo Stock Exchange on November 17. The move comes as Tokyo Star Bank is preparing to list tomorrow, in what at Y90.9bn is expected to be Japan’s third largest IPO this year.

Mitsubishi Materials and Sumitomo Metal Industries will each cut their stakes in Sumco to 31.8 per cent through the IPO. There is an over-allotment of 4.38m shares.

The listing comes as the near-term outlook for the silicon wafer market is looking more promising. Silicon wafers are used to make semiconductor chips.

“Over the next 12 months, demand for silicon wafers will grow over 10 per cent on a volume basis, in line with growth in demand for semiconductors,” said Mikiya Yamada, analyst at JPMorgan in Tokyo.

On Monday, Shin-Etsu Chemical, the world’s largest maker of silicon wafers, raised its net profit forecast for the year by nearly 7 per cent to Y110bn, marking its eleventh consecutive year of record profits.

Shin-Etsu attributed the upbeat forecast in part to buoyant demand for silicon wafers, which helped it report a 19 per cent rise in first half net profit to Y55.6bn.

Shin-Etsu and Sumco together control about 60 to 70 per cent of the market for advanced 300mm wafers – a market that has been growing at 60 per cent year-on-year, according to Takato Watabe, analyst at Deutsche Securities in Tokyo.

Demand is shifting from 200mm wafers to 300mm wafers because the larger wafers offer more chips per wafer, allowing semiconductor manufacturers to reduce their costs.

Both Shin-Etsu and Sumco plan to increase capacity but this was not expected to upset the demand-supply balance at least until 2007, Mr Watabe said.

●Mizuho Financial Group, Japan’s second largest bank, will raise $4.6bn in a share sale designed to strengthen its balance sheet on the back of its soaring share price, Reuters reports.

Mizuho set a price on Monday of Y696,780 per share, a 2 per cent discount to the bank’s closing share price of Y711,000.

The issue was between three and four times over-subscribed, with strong demand from foreign investors, said joint global co-ordinator, Nikko Citigroup.

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