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Carlyle targeting Oct IPO for Rigaku, sources say

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Tokyo Metro, Kioxia also targeting October IPOs

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Tokyo Metro to launch IPO on Friday, sources say

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Japan market suffered historic rout in August

By Miho Uranaka, Kane Wu and Sam Nussey

TOKYO, Sept 19 (Reuters) - Japan's Rigaku, a maker of

X-ray testing tools backed by buyout firm Carlyle Group ( CG ),

is preparing for a domestic initial public offering (IPO) in

October, two sources familiar with the matter said.

Carlyle is targeting a market value for Rigaku of around 300

billion yen ($2.09 billion) in the IPO, one of the sources and a

third source said.

A listing is not certain and, depending on market

conditions, may be cancelled or rescheduled, one of the sources

said.

Japan's stock market suffered a historic rout in early

August sparked by a surprise rate hike and fears of a U.S.

recession, before regaining ground.

Nomura, Morgan Stanley and Bank of America are joint global

coordinators, two of the sources said.

Rigaku, Carlyle, Nomura, Morgan Stanley and Bank of America

declined to comment. The sources declined to be identified as

the information is not public.

Carlyle will sell shares in the IPO, the sources said.

Subway operator Tokyo Metro, potentially the largest Japan

IPO in roughly six years, and chipmaker Kioxia are also

targeting listings in October, Reuters has reported.

Tokyo Metro will launch its IPO on Friday, four sources

said. Tokyo Metro declined to comment.

Fifty-four companies are scheduled to list in the nine

months to end-September, compared with 66 companies over the

same period a year earlier.

Some market participants expect the total for this year to

undershoot last year's 96 IPOs, pointing to market conditions

following August's slump and more firms looking to mergers and

acquisitions (M&A) to build scale.

"It continues to be difficult conditions for stock

selection," said Soichiro Saito, head of the private corporate

advisory department at SMBC Nikko Securities.

"However, there is solid demand for companies that are

properly researched with high growth potential, including from

overseas investors, so it's not such a gloomy situation."

TESTING DEMAND

Carlyle announced in January 2021 it was acquiring a roughly

80% stake in Rigaku through its fourth Japan buyout fund, with

the company's then-CEO Hikaru Shimura holding a roughly 20%

stake.

Rigaku said at the time it is targeting growing demand for

X-ray equipment due to the miniaturisation of semiconductors and

electronic components, and aims to list in the coming years.

The growing complexity of chip manufacturing processes is

driving the need for testing with Rigaku's tools, which are

offered for research and development, and production.

Rigaku also sells its equipment to industries such as

materials science and pharmaceuticals.

Founded in 1951, Rigaku booked revenue of 80 billion yen in

2023, up around a quarter from a year earlier, and makes 70% of

its sales overseas.

Rigaku's peers include Spectris ( SEPJF )-owned Malvern

Panalytical, located in Britain, and U.S.-based Bruker ( BRKR ).

Jun Kawakami, formerly an executive at General Electric and

Arteria Networks, became CEO last year, with Shimura serving as

chairman.

Buyout firms are making deals in Japan as companies shed

non-core assets, go private, or management grapples with a lack

of successors.

Carlyle's other investments in Japan include KFC Japan,

Iwasaki Electric and Orion Breweries.

The firm said in May it has raised 430 billion yen in its

largest ever investment vehicle for Japan.

($1 = 143.4800 yen)

(Reporting by Miho Uranaka and Sam Nussey in Tokyo and Kane Wu

in Hong Kong; Editing by Muralikumar Anantharaman)