News

By Sam Nussey and Makiko Yamazaki

TOKYO, Sept 21 (Reuters) - Chipmaking equipment maker Kokusai Electric said on Thursday it plans to list on the Tokyo Stock Exchange on Oct. 25, setting the stage for what could be Japan's largest initial public offering (IPO) in five years.

Kokusai set an indicative price of 1,890 yen per share and plans to sell 111.2 billion yen ($749.88 million) worth of shares. There is an overallotment option if demand is strong enough.

KKR agreed to buy Hitachi's 6501.T electronic equipment unit in 2017 in a deal valuing the business at 257 billion yen 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 Applied Materials AMAT.O in 2019, but the $3.5 billion deal was terminated after failing to obtain regulatory approval in China.

A successful listing would follow the blockbuster New York IPO of SoftBank-owned chip designer Arm ARM.O, which investors hoped would lead to a wave of stock market launches.

IPO activity has remained strong in Japan, where the stock market is at 33-year highs and interest rates ultra low.

Kokusai's preparations come amid debate about the strength of demand in the chip industry, with excitement about artificial intelligence tempered by a slowdown in the market for electronics such as smartphones and personal computers.

Industry shares sold off after Reuters last week reported leading contract chipmaker TSMC 2330.TW told suppliers to delay orders of chipmaking equipment on worries about demand.

Kokusai reported operating profit fell by a fifth to 56 billion yen in the year ended March compared to the same period a year earlier. Sales were roughly flat at 245.7 billion yen.

A successful listing could help KKR's image in Japan after its auto parts supplier Marelli Holdings last year requested a massive debt waiver and generated losses for many major banks.

($1 = 148.2900 yen)

(Reporting by Sam Nussey and Makiko Yamazaki; Editing by Christopher Cushing)

((sam.nussey@tr.com;))

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