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June 28, 2017

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Japan's Seibu Holdings jumps 11 percent

TOKYO--Japanese railway and hotels giant Seibu Holdings jumped nearly 11 percent on its return to the Tokyo stock market Wednesday, a decade after it was de-listed following a major accounting scandal.

The stock finished at 1,770 yen (US$17.25) from its 1,600-yen initial public offering price, valuing the group at about 605 billion yen (US$5.89 billion) and marking a solid result after some recent IPO bombs in Japan.

Seibu shares were priced at the bottom end of the company's proposed range after the Tokyo stock market lost momentum recently and global investors become more selective about which Japanese shares they buy.

Its return to trading comes about a month after shares in Japan Display — the world's biggest maker of screens for smartphones and tablets and a key Apple supplier — plunged 15 percent on their Tokyo debut, following a US$3.2 billion initial public offering.

Like Seibu, the screen maker was priced at the lower end of expectations, suggesting investors were wary about the sale.

Consumer electronics Hitachi Maxell also fell on its Tokyo debut last month.

Tokyo's Nikkei 225 index — which posted its best annual return in decades last year — has been choppy, with the benchmark index down about 11 percent since the start of 2014.

"The most logical reason why Seibu is up is that it was priced so low that the chance of failure was greatly minimized," Tatsunori Kawai, chief strategist at Securities, told Dow Jones Newswires.

Toshihiko Matsuno, senior strategist at SMBC Friend Securities, pointed to lackluster trading volume in the Tokyo market, and warned that the "timing of this deal is just not good."

"Seibu is not an issue people feel they must own. It could struggle," he added.

The company was delisted in 2004 after a major accounting scandal. Its return to the stock market came after it aggressively shed assets, cut costs and took a private bailout.

The company on Wednesday unveiled a rosy earnings forecast, saying it expected to report a 10-percent year-on-year rise in operating profit for the year ended in March, to be followed by a 9.7-growth rise in the year started in April.

Because the price range Seibu had set was lower than expected, its top shareholder, Cerberus Capital Management, decided not to sell shares in the listing. Cerberus will continue to hold its current 35.4-percent stake.

Despite that decision the company's other major shareholders, including Norinchukin Bank and Development Bank of Japan, intend to sell their holdings.

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