CWS 3.0: September 17, 2014

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Japan’s largest staffing company announces billion-dollar listing

In a move that is expected to significantly impact the global staffing market, Recruit Holdings, the largest staffing company in Japan and fifth largest in the world, announced it will list on the Tokyo Stock Exchange on Oct. 16., in an IPO worth an estimated ¥193 billion ($1.8 billion).

Recruit aims to raise ¥90 billion ($839.2 million) through the sale of new shares, priced at ¥2,800 ($26.11) per share. Current shareholders will also sell an estimated ¥100 billion ($932.5 million) worth of stock. According to Recruit, the IPO will give the company a market value of up to ¥1.6 trillion ($14.9 billion). 

Through this IPO, Recruit has made public its intention to challenge Adecco for the position of the number one recruitment company in the world. However, according to research from Staffing Industry Analysts, Recruit is currently the fifth-largest staffing firm in the world, behind Adecco, Randstad, ManpowerGroup and Allegis Group.

While Recruit does not expect to become the No. 1 recruitment firm overnight, it has stated that it plans to assume the top spot by 2020. The company, however, still has quite a way to go. Recruit reported revenue for the year ending March 2014 of ¥1.2 trillion ($11.2 billion), compared with €19.5 billion ($25.2 billion) in revenue for Adecco in 2012. Adecco currently has a global market share of 6.5 percent, compared with 1.5 percent for Recruit. 

According to the Wall Street Journal, the Recruit IPO reflects the growth of temporary staffing in Japan, where two decades of economic stagnation have eroded the post-war norm of a job-for-life. A Japanese government survey last year found that the number of non-regular workers (including temporary or part-time workers) had risen to more than 20 million, equivalent to 38 percent of the workforce.   

Recruit acquired U.S.-based staffing firms Staffmark and Advantage Resourcing in 2011; both were ranked among the largest U.S. staffing firms at the time. In 2010, it had acquired the CSI Companies. Staffmark and CSI operate in the U.S. while Advantage also operates in the U.S. and Europe

The forthcoming IPO is not the first time that Recruit has floated. The company was embroiled in an insider trading and corruption scandal in 1988, which forced many prominent Japanese politicians to resign.

In 1989, the founder of Recruit Holdings (formerly Recruit Co), Hiromasa Ezoe, was arrested for granting unlisted shares of one of the firm’s subsidiaries, Recruit Cosmos Co, to a number of high-profile politicians (including the prime minister), business leaders and senior bureaucrats.

The scandal, still one of the most notorious in the country, brought down the Japanese government at the time.