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Japanese blog provider IPO confirmed for Feb 9th January 12, 2006

Posted by fukumimi in IPO, IT, Japan.

Drecom (http://www.drecom.co.jp) have confirmed an IPO on the Tokyo Stock Exchange’s Mothers (market of the high-growth and emerging stocks).

Drecom is a Japanese company started in 2001 by a student at Kyoto University, and posted sales of approx USD2M and net earnings of approx USD0.48M in the year ending March 2005. For the current financial year, they project sales increasing by 189% to approx USD6M and net earnings to increase by 120% to approx USD1M.

Drecom provides B2C and C2C blog related services (blog software, blog asp, blog portal, blog tools, blog search, etc), and is the first pure BSP IPO in Japan.

The blog market is hot in Japan (as it is pretty much everywhere) and there are a whole host of BSPs in this space. However, with the recent strength in the stock market, and as the first pure play Blog related IPO to hit the market, it is likely that Drecom will have a very strong IPO. Only 640 shares up for grabs though. Expect this IPO to be heavily oversubscribed, and for the stock to be valued at a huge PER, something over three figures may not be unrealistic with the state of the current market.

The “alternative” Japanese markets (Mothers, JASDAQ, Hercules) may be a good potential exit candidate even for overseas companies, given the relatively lax listing requirements. There are already many overseas companies eyeing a Japanese IPO. As an alternative early liquidity event (vs trade sale/M&A) these markets should be given serious consideration. Japan’s stock markets are buoyed up by private investors moving their savings out of savings accounts which accrue virtually no interest and putting the money into the stock market, this trend is expected to be maintained in the next few years as a huge number of new post-war baby boomer retirees come onto the scene with plenty of savings and time to play the markets.



1. Chris_B - January 24, 2006

The upsurge of individual investors is a slightly upsetting trend. Without sound accounting by public companies, weak shareolder disclosure laws and very low liquidity, not to mention the seeming incompetance of the TSE, a flood of private investors is pretty much another bubble waiting to pop.

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