The move by Japan Display, a major supplier to Apple, to raise up to $4 billion with a March listing in Tokyo looks like an easy sell.
With a two-week roadshow starting on Monday, the world’s largest manufacturer of screens for tablets and smart phones is targeting a March 19 listing date and will announce a price range on March 3, according to a term sheet seen by FinanceAsia.
There will be 353.9 million shares – 140 million primary and 213.9 million secondary – on offer, with an overallotment of 18 million shares.
Just over half of the shares will be offered to the Japanese retail market, with the remainder available to global retail investors through private banks, a person close to the deal told FinanceAsia.
The Tokyo-based company will use the proceeds to increase capacity across a number of its production lines, and also for new developments in liquid crystal display (LCD) technology.
Japan Display may resonate well with retail investors. The 2011 joint venture between Sony, Toshiba and Hitachi's LCD divisions showed the "innovative [side of] corporate Japan", the person said.
"Japan Display has an interesting history, as it's an amalgamation of several panel producers into one. So it's got that aspect to it," the person said.
At the time, a Japanese government-backed fund invested $2 billion in the venture, according to media reports.
The company has also managed to differentiate itself from global rivals by focusing on small- to medium-size screen production.
However, it is its role as a major supplier to Apple - company executives estimate over a third of its revenue comes from Apple – that should make the company an easy sell.
“Everyone has a big screen in their house and they also tend to be expensive,” the person told FinanceAsia. “There's plenty of room for growth in the small- to medium display market.”
The person noted that consumer demand for smartphones and tablets was strong globally, a trend that will likely continue. "I know Samsung can't make enough [LCDs to keep up with the demand]."
NPD DisplaySearch, a consultancy, estimates that global tablet PC shipments will be 315 million units in 2014 and rise to 455 million in 2017, comprising of nearly 75% of the mobile PC market.
Meanwhile, the average selling price for worldwide tablets will also fall from $311 in 2014 to $296 in 2017, which will help boost sales among first-time buyers in emerging markets in particular.
“Momentum for the tablet PC market is in full swing as it has become the dominant mobile PC form factor,” Richard Shim, senior analyst at NPD DisplaySearch, said in a statement.
“Competition is expected to increase as traditional notebook PC brands, including Lenovo, HP, and Dell, update their product portfolios to emphasize tablet PCs," he added.
Emerging market consumers' shift towards smaller screen sizes will compound this, with NPD DisplaySearch forecasting China, Asia Pacific, Eastern Europe, Latin America, the Middle East and Africa will account for 60% of global shipments this year.
Bank of America Merrill Lynch, Goldman Sachs, Morgan Stanley, Nomura, Deutsche Bank and UBS are joint bookrunners for the international tranche, while Nomura Securities, Mitsubishi UFJ Morgan Stanley Securities and Goldman Sachs Japan are handling the Japanese tranche.