Japanese companies in dash for cash; risks may grow

* Five-fold jump in equity raisings in H1

* Bond raisings up 32 pct in first-half

* Concerns rise about quality of issues, dilution of holdings

By Junko Fujita

TOKYO, July 3 (Reuters) - Japanese companies raised $17 billion from resurgent equity markets in the first half, a five-fold jump from a year earlier, and seem hungry for more to replenish capital and fund investments.

While the trend is a boon for investment banks, bringing in more than $700 million in fees from managing the offerings, it could hurt investors by diluting the value of their holdings or triggering share price falls.

There is also the risk that companies with patchy records and hazier outlooks may attempt to cash in.

The bulk of the capital raising so far has come from banks and brokers, such as Sumitomo Mitsui Financial Group (8316.T) and Nomura Holdings (8604.T), which were under the most immediate pressure to bolster capital depleted by the financial crisis.

But the fund-raising rush will likely spread to a wider range of sectors as managers grow more confident the global economy has stabilised and look to strike while the stock market is still firm, analysts, bankers and lawyers say.

"It's not just banks and brokers anymore," said Seishi Ikeda, a lawyer specialising in capital markets at Baker & McKenzie in Tokyo. "A year ago good companies couldn't do equity finance because the market was dead. But now any healthy company can."

Encouraged by a 40 percent rally in Japanese stocks off a 26-year low in early March, companies sold $17.4 billion worth of new shares in January-June, Thomson Reuters data show. About 70 percent of that tally came from Nomura and SMFG, whose $9.4 billion share sale was Japan's biggest in eight years.

The second-half started off with a bang. This week All Nippon Airways (9202.T) announced it would raise up to $1.9 billion, while leasing and property firm Orix Corp (8591.T) said it would sell about $1 billion in new shares. [ID:nT105398] [ID:nT226132]

So far investors seem willing to buy into the offerings, as long as the company can illustrate a convincing strategy for how they will use the funds to drive growth.

Shares of Orix fell 5 percent on Wednesday after Reuters and other media reported its share issue, which would increase the number of shares by 20 percent. But it has since regained that ground and more, closing Friday up 7 percent.

In addition to repaying debt, Orix said it would use the funds to fuel its expansion in Asia, buy real estate assets and bolster its financial solutions business.

"Investors globally have good appetite and they have plenty of cash. And those companies so far are explaining how they would grow with the new money," said Shinichi Ichikawa, chief equity strategist at Credit Suisse Securities.