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No. 359, August 1999

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Japanese Companies in the US


For the first time, a Japanese company went public in the United States rather than at home. INTERNET INITIATIVE JAPAN INC., generally ranked as the country's top Internet services provider, delivered this seeming rebuff to Japan's over-the-counter market and stock exchanges. However, IIJ executives said that the decision to list on NASDAQ had more to do with the company's perceived need to expand its presence in the United States, the center of the international Internet business, than with any drawbacks of an initial public offering in Japan. IIJ, which has an extensive Internet backbone in Japan with links to other Asian countries as well as its own transpacific backbone, raised $143 million from its IPO. It will use this money mainly for capital investment, including additional data centers.

The electronic stock trading system developed by OPTIMARK TECHNOLOGIES, INC., which matches large institutional trades, has received a major financial endorsement. SOFTBANK CAPITAL PARTNERS LP — the big venture capital fund recently organized by SOFTBANK CORP. to invest in Internet and related ventures eyeing IPOs in the near term (see Japan-U.S. Business Report No. 358, July 1999, p. 6) — agreed to invest as much as $100 million in the Jersey City, New Jersey company. Softbank and OptiMark have an indirect link. Softbank is working with the NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. to bring a NASDAQ-type electronic stock market to Japan (see Japan-U.S. Business Report No. 358, July 1999, p. 18), while NASD is installing the OptiMark system for trading NASDAQ-listed stocks. At the same time, the Osaka Securities Exchange is implementing the electronic trading system, with operations scheduled to begin in the spring of 2000 (see Japan-U.S. Business Report No. 349, October 1998, p. 16).

Continuing to unwind its operations in the United States while the search continues for a buyer of its Japan businesses, nationalized LONG-TERM CREDIT BANK OF JAPAN, LTD. tentatively has agreed to sell the assets managed by its New York City trust bank subsidiary to BANK OF NEW YORK CO. These assets totaled an estimated $5 billion or so at the end of 1998. The sale price still is being negotiated. This spring, LTCB arranged to sell its $11 billion portfolio of U.S.-based loans to GE CAPITAL CORP. (see Japan-U.S. Business Report No. 357, June 1999, p. 6).

CHASE MANHATTAN CORP. is the sole custodian of the $16.7 billion or so worth of pension funds and other assets that TOYO TRUST & BANKING CO., LTD. manages overseas (see Japan-U.S. Business Report No. 354, March 1999, p. 6). The number- five trust bank, which is withdrawing from offshore operations, broke ground with this arrangement since trust banks and life insurers normally tap their own foreign units or multiple foreign financial institutions to handle custodial functions. The tie-up with Chase also could bring changes to the way that Toyo Trust manages money invested overseas.

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