Allganize Holdings, a developer of generative AI software for banks, insurers and government agencies, closed its first day on the Tokyo Stock Exchange's Growth market on Wednesday at 1,250 yen, 0.8% below its 1,260-yen initial public offering price, after opening 7.2% higher.

The slide made Allganize the third company in three Tokyo trading sessions to end its debut under the offer price, following toggle holdings on Oct. 30 and MabGenesis on Nov. 2. For investors across Asia, the deal tested whether demand for AI listings extends from chipmakers to the software companies selling AI tools to corporate clients, and it came on a day when Tokyo's chip stocks slid. The outcome also matters in Seoul: South Korea produced 41% of Allganize's sales in the nine months to June, and an SK Telecom venture fund sold stock in the offering.

Allganize's first day swings between 1,181 and 1,392 yen

The stock opened at 1,351 yen at 9:13 a.m. and hovered near 1,300 yen during the morning, then fell as low as 1,181 yen in the afternoon session. It rallied to a session high of 1,392 yen at 2:47 p.m. before sellers pushed it back to 1,250 yen at the close, according to price data from Kabutan.

The closing price gave Allganize a market value of about 23.8 billion yen, based on the 19.07 million shares outstanding at listing. The Nikkei Stock Average fell 1.4% to 62,188.63 on the day, Jiji Press reported.

Allganize priced the deal on Oct. 26 at the top of its 1,250 to 1,260 yen range. The company sold 658,100 new shares, while existing holders sold 2,954,900, with up to 541,900 more available through the over-allotment, according to the exchange's listing outline. At the offer price that adds up to about 5.2 billion yen, and more than 80% of the base offering went to selling shareholders rather than to the company.

The largest sellers were KDDI Open Innovation Fund III, with 627,400 shares, Chief Executive Lee Changsu, with 370,100, and SK Telecom Innovation Fund, with 311,000. SMBC Nikko Securities led the offering, with Daiwa Securities and SBI Securities as principal underwriters.

Allganize forecasts profit to more than double

Allganize was founded in Oakland, California, in 2017 and moved its headquarters to Tokyo in December 2021, according to its website. Its main product, Alli LLM App Market, is sold both as cloud software and as a system installed on clients' own servers, a format it pitches to lenders and public bodies that cannot move confidential data to outside clouds. Customers named in its growth-plan document include Sumitomo Mitsui Banking Corp., Dai-ichi Life Insurance, NTT Docomo, KDDI, Industrial Bank of Korea and Samsung Fire & Marine Insurance.

In a filing released on listing day, the company forecast revenue of 2.02 billion yen for the year ended Sept. 30, up 51%, and operating profit of 341 million yen after a loss of 206 million yen a year earlier. For the year to September 2027, it projects revenue of 3.2 billion yen, up 58%, operating profit of 1.05 billion yen and net profit of 925 million yen, more than double the 448 million yen it expects for the year just ended.

Contracted clients rose to 240 at the end of June from 210 a year earlier, and average annual revenue per client climbed to 6.8 million yen from 4.9 million yen, the company said. Of the 1.4 billion yen in sales for the nine months to June, Japan contributed 773 million yen, South Korea 566 million yen and the U.S. 58 million yen.

Wednesday's close valued the stock at about 26 times the company's forecast earnings per share of 48.65 yen for the year to September 2027. Allganize plans to spend up to 1.36 billion yen raised in the listing over two fiscal years, mostly on hiring at its subsidiaries (986 million yen) and on product development (345 million yen), its growth-plan document shows.

Tokyo's IPO pipeline: estie lists on Friday

The weak run for recent newcomers comes as more deals line up. Toggle holdings, which uses its own AI to buy and sell redevelopment sites, ended its Oct. 30 debut at 3,640 yen, 9.9% below its 4,040-yen offer price. MabGenesis, which develops antibody drugs for pets, closed its Nov. 2 debut at 696 yen, 16.1% under its 830-yen price, according to Kabutan price data.

Commercial real estate data provider estie is scheduled to join the Growth market on Friday, Nov. 6, after pricing at the top of its range at 1,100 yen. Almost all of the 5.69 million shares in its base offering are being sold by existing holders, led by venture fund UTEC 4 with 3.38 million shares, the exchange outline shows. Including the over-allotment, the deal is worth about 7.2 billion yen at the offer price.

Cloud reception software maker RECEPTIONIST lists on Nov. 10 at 850 yen, and the Japan Exchange Group's calendar shows six new listings scheduled from Nov. 6 through Dec. 3. HiJoJo Partners, which sells funds that invest in startups, plans to issue 5.41 million new shares, the most of any November listing, and sell 3.6 million existing ones under lead manager Mizuho Securities. It set an indicative range of 550 to 560 yen on Wednesday, with bookbuilding running from Nov. 5 to Nov. 11 and the price due on Nov. 12.