Passing on TSE Prime for the Standard market (2021)

A market segment that re-opened a twenty-year-old question

The core of this judgement is that the model Sano Tsutomu achieved at the 1999 listing — a standalone Japanese listing with the parent’s ownership left intact — turned, twenty-odd years later, into a constraint under a new set of listing standards. What had been a choice made to win trust in the Japanese market by talking the parent round came back, measured against the new yardstick of the Prime market, as a shortage of tradable shares. One can read it as a state in which the company’s actual strength and its institutional position as a listed issuer no longer agreed.

Oracle Japan did not take the route of moving parent-held shares to clear the standard. It chose instead to leave the ownership structure alone and remain on the Standard market. That it did not alter the structure of control even in the face of a sharp fall in the share price suggests the consistency of a company managed, throughout, from the position of being a US parent’s subsidiary. Whether it will make another run at Prime, or keep this capital structure indefinitely, remains an open question.