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By Sam Nussey and Miho Uranaka
TOKYO (Reuters) - Kokusai Electric shares jumped 29% in their Tokyo market debut on Wednesday after private equity firm KKR sold shares in the chip equipment maker for $724 million in Japan's largest initial public offering (IPO) in five years.
The stock opened at 2,116 yen and climbed to a high of 2,371 yen, valuing the company at 546.3 billion yen ($3.65 billion), as investors grabbed shares following the rare IPO of a key chip tool manufacturer.
Kokusai had priced its shares at 1,840 yen in the largest Tokyo listing since telco SoftBank Corp went public in 2018, providing a partial exit for KKR, which has cut its stake to 47.7% from 73.2% without overallotment.
"The market for chip related stocks outside of AI is weak so some were wondering what would happen," said Tomoichiro Kubota, analyst at Matsui Securities.
"In the end the company had a good start," he said.
Chip tool makers have suffered from a downturn in the market for electronics such as smartphones and PCs, with early euphoria over advances in generative artificial intelligence also cooling.
While Kokusai is exposed to slumping demand for memory chips, that market is expected to rebound, and the tool maker will also able to expand in other segments, said Kazuyoshi Saito, an analyst at Iwai Cosmo Securities.
KKR agreed to buy Hitachi's electronic equipment unit in 2017 in a deal valuing the business at 257 billion yen ($1.72 billion) as the conglomerate streamlined operations.
The private equity group then spun off Kokusai, which manufactures machines for depositing thin films on silicon wafers, the following year.
KKR sought to sell Kokusai to competitor Applied Materials in 2019, but the $3.5 billion deal was terminated after failing to obtain regulatory approval in China.
Applied Materials has built a 15% shareholding in the company over the last three years.
Equity offerings in Tokyo have surged with Japan benefiting from lower interest rates than other countries, backing from billionaire Warren Buffett and rotation by investors out of China.
($1 = 149.8300 yen)
(Reporting by Sam Nussey, Miho Uranaka, Mayu Sakoda and Makiko Yamazaki; Editing by Chang-Ran Kim and Sonali Paul)
