Regarding the Nikkei Special Feature: 'Turbulent TSE Growth Market Reform'

AK0003
Yesterday (May 27), the Nihon Keizai Shimbun began a special feature titled 'Turbulent TSE Growth Market Reform.' Two years ago, the Tokyo Stock Exchange (TSE) issued a request to companies on the Prime and Standard markets to improve their value by 'managing with an awareness of cost of capital and stock price.' This request has been highly praised for raising the value-creation mindset of corporate executives. On the other hand, there was a sense that Growth market companies were somewhat left behind, which is why the TSE has now embarked on Growth market reform.
As for specific measures, it has been almost finalized that the listing maintenance criteria for the Growth market will be changed from 'market capitalization of 4 billion yen or more after 10 years of listing' to 'market capitalization of 10 billion yen or more after 5 years of listing.' The Nihon Keizai Shimbun's special feature is based on this trend.

In this article, I will introduce relevant TSE materials for those interested in this topic.

This reform has been solidified while listening to the opinions of experts at the 'Follow-up Meeting on the Review of Market Segments' hosted by the TSE.
Follow-up Meeting on the Review of Market Segments | Japan Exchange Group
The following materials were submitted by the TSE for this meeting to discuss the current status of the Growth market and reform proposals.
20th Meeting (February 18, 2025) Material 4: 'Future Responses in the Growth Market'
um3qrc000000t58p.pdf
21st Meeting (April 22, 2025) Material 3: 'Future Responses in the Growth Market'
um3qrc0000016108.pdf

Yesterday's first-day article of the feature states, 'As of the end of April, there were 425 Growth companies with a market capitalization of less than 10 billion yen, accounting for 70% of the total.' The corresponding data is likely the market capitalization distribution chart on page 15 of Material 3 from the 21st meeting. Since this chart is based on closing prices from January to March of this year, the number of companies with less than 10 billion yen is '224 companies with less than 4 billion yen + 198 companies with 4 to 10 billion yen = 422 companies,' so the number is slightly different. The Nikkei article likely recalculated it as of the end of April. Even if slightly older, I believe the distribution chart in Material 3 of the 21st meeting is useful information for considering this issue.
Yesterday's article also states, 'According to the TSE, among companies that have listed in the past 20 years, including its predecessor Mothers, only 5% of the total have grown to a market capitalization of 10 times or more their IPO value.' This was likely taken from page 2 of Material 4 of the 20th meeting. It presents data showing 42 companies (5%) out of a total of 812.
Page 17 of Material 3 from the 21st meeting shows statistical data such as 'the majority of companies included in domestic small and mid-cap funds have a market capitalization of 10 billion yen or more,' and page 18 states, '93% of companies that grew to a market capitalization of 10 billion yen or more after listing achieved this within 5 years of listing.'
And above all, these materials explain in detail the interviews with relevant parties. If you are interested in Growth market reform, please take a look at these materials. (End)