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Like a tee shot sliced into the woods, shares in the maker of the world’s most expensive golf clubs are off to a very rough start.

Honma Golf shares are down 8.5 per cent in their first day of trade on the Hong Kong stock exchange, write Peter Wells and Jennifer Hughes in Hong Kong. They had been down as much as 16.6 per cent – a sub-par debut in the non-golfing sense of the word.

The Japan-headquartered company’s initial public offering was priced at HK$10 per share, which was toward the higher end of its HK$8.46 to HK$10.98 float price range.

The listing – the fifth-largest golf IPO on record, according to Dealogic – raised about $160m for the company, and it plans to spend the cash on acquisitions and promotion via sales and marketing.

Honma listed on Japan’s Jasdaq over-the-counter market in 1995 but struggled in the 1990s after buying Japanese golf courses itself. By 2005 the company went bust, its founding family ceded control and it was delisted in Japan.

In 2009 the company was bought by Liu Jianguo, a Chinese businessman who, according to Honma’s prospectus, wanted “to restore Honma’s status as an elite golf brand and also power it into Japan’s New Corporate Generation — a new generation of energetic, innovative and well-managed Japanese companies.”

The company is known for making the most expensive clubs in the world, according to Forbes, and is pinning its hopes on the Chinese market, the sport’s fifth-largest, and fastest-growing, market.

That could be a hard sell, as swinging a set of 24-carat gold-plated and platinum clubs may set off alarm bells given Beijing’s national crackdown on corruption over the past few years.

In its prospectus, Honma cites China’s crackdown as a risk factor for the company.

“If public perception of golf continues to be tainted by corruption cases, demand for
our products in China could be adversely affected,” the company said.

Honma isn’t the only golf company with IPO ambitions. Acushnet, the golfing equipment company behind brands such as Titleist golf balls and Footjoy shoes, in June flagged its intention to list in the US.

But clouds have been forming over the golf market in general. Both Nike and Adidas have this year decided to exit the golf equipment businesses, and the game itself is being challenged by cycling as the preferred choice for corporate networkers.

A mooted $1.4bn buyout of one of Japan’s biggest golf course owners, Accordia Golf, by South Korea’s MBK Partners would have faced a challenge in the form of many elderly players in Japan abandoning the game, but the deal had reportedly been shelved.

Photo courtesy of Honma

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