On September 6, 2018, the Nikkei (Nihon Keizai Shimbun) published an article titled, “Pepper Food Service Files for Nasdaq ADR Listing.”
According to the article, the company filed a registration statement for its American Depositary Receipts (ADR) with the SEC on September 4. Pending approval from the SEC and Nasdaq and the completion of necessary procedures, the listing is expected to occur around September 28. Currently, there are 12 Japanese companies listed on the NYSE and Nasdaq. The most recent listing was LINE on the NYSE in July 2016.
Listing on Nasdaq allows a company to increase its visibility in overseas markets, including the United States. While listings on foreign markets were active during the 1990s and 2000s, when Japanese companies were vigorously expanding abroad, the necessity of maintaining such listings subsequently declined. This was due to factors such as the globalization of securities markets, driven by high-speed trading systems on domestic exchanges, and an increase in capital-raising opportunities outside of public equities. As a result, the 2010s saw a continuing trend of Japanese companies delisting from U.S. stock markets.
Why, then, did Pepper Food Service decide to enter the Nasdaq market at this particular time?
Pepper Food Service’s main business is its steakhouse chain, represented by “Ikinari! Steak.” The company first entered the U.S. market in 2017 and reportedly plans to expand to 11 locations by the end of 2018. Following this, the plan is to explore expansion not only in the U.S. but also in other regions, including other business formats. As a foothold for overseas business development, the company is first expanding into the U.S., the home of steak culture. To achieve this, improving brand recognition and strength is essential. The strategy of listing on the U.S. market—Nasdaq—to achieve this goal may have been an inevitable one.
As mentioned, the number of Japanese companies entering foreign markets has been on a downward trend in the 2010s. However, recently, the number of companies like Pepper Food Service, which are developing their business globally and considering entry into the Nasdaq market to support that, has been gradually increasing.
Our firm is committed to actively supporting venture companies that are aiming for such a Nasdaq listing.
(November 2019 Addendum) Please see this article regarding the Pepper Food Service Nasdaq listing.
