The relatively small size of the flotation is being seen as much as a strategic move as it is a financial one by analysts. The IPO will only raise £325.7m, which hardly gives it the spending power to increase its prominence on the international stage.
Dentsu, which owns 20% of B|Com3, still has no real presence in the US and this IPO is unlikely to change that situation. Analysts were already predicting that a secondary equity issue is likely to follow in the near future so that Dentsu has the cash it needs to expand internationally. A bid has always seemed likely for the D'Arcy- and Leo Burnett-owning B|Com3.
The IPO boosts Dentsu's market capitalisation to £3.4bn, putting it behind the Interpublic Group of Companies, WPP Group and Omnicom Group, which are the world's first, second and third largest agency groups respectively.
Dentsu, Japan's largest agency group, ended the day at Y470,000 at share from an initial public offering price of Y420,000 and marks Japan's biggest IPO of the year.
Dentsu had set its pre-market price of Y425,000 a share for its initial public offering of 135,000 shares. Dentsu offered 25,000 new shares ahead of the listing, while 110,000 existing shares are being be sold to the public in a secondary offering.
There had been some fears that the IPO might have been cancelled because of the downturn but, as it goes ahead, it has been significantly scaled back. It had been expected at one stage to seek to raise around £1.1bn.
Earlier this year in the UK, Dentsu merged its two UK agencies, CDP and travissully. The merger came less than four months after CDP lost its showpiece £20m Honda account.
The merger created a new agency called cdp-travissully with billings of around £40m. Many industry observers were surprised that Dentsu did not move ahead and rebrand the agency under the Dentsu name.
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