Relisting on the TSE First Section, and the fund’s exit (2015)

The fund’s return, and the company’s proof

To read this relisting only as a successful private-equity exit is to miss its centre. From the moment of the 2012 carve-out the fund had set a flotation as the route to recovering its investment, and the 2015 relisting ripened exactly as designed. But at the moment the exit was made, Dexerials — still carrying its history as a Sony materials subsidiary — had yet to show what it could promise the market as an independent company. That for some years after the listing the shares traded below net assets, and that the president was taunted by investors asking whether the flotation had been a fraud, reflects how far the fund’s return was from the company’s proof of its own worth.

Even so, what followed shows that the form of independence can bear fruit given time. The functional-materials technology the market would not price at the listing was rewarded, amid pandemic demand and a favourable technology cycle, with the largest world share in three products, and market capitalisation returned nearly tenfold within a few years. If President Shinya is right that investment decisions would have come more slowly had the company stayed a subsidiary, then returning it to the market was itself the precondition of the revival. The value of leaving a parent’s capital and becoming an independent company may be measured not on the day of the listing but by what is accumulated afterwards.