Pachinko parlour operator Dynam Japan is betting a Hong Kong listing will help it raise about US$200 million, but it may face a lack of interest from local investors not familiar with the popular Japanese pastime.
Dynam, Japan's second-largest pachinko hall operator as measured by the total value of pachinko balls and pachislot tokens rented in 2010, may have pruned the planned initial public offering (IPO) with earlier speculation pointing to a US$300 million IPO. The company made a pre-listing filing to the Hong Kong stock exchange this week.
'Although the number of IPOs in Hong Kong has picked up since the latter half of the second quarter, IPO sizes are all relatively small,' Kenny Tang Sing-hing, general manager of AMTD Financial Planning, said.
Pachinko is like vertical pinball. Players rent small metal balls and fire them in rapid succession into a playing field.
It's one of the most popular forms of entertainment in Japan, adding up to a 19.4 trillion yen (HK$1.8 trillion) industry and accounting for 28.6 per cent of Japan's entertainment market in 2010, according to the Japan Productivity Centre. But, pachinko has not taken off outside Japan and this may make investors wary of putting their money into the company.
'My interpretation is that Dynam chose Hong Kong because at the moment the markets with the most abundant funding are it and the mainland,' Sun Hung Kai Financial analyst Daniel So.