Fundraising through initial public offerings in Japan is drying up, in contrast to a dealmaking boom across Asia, after regulatory changes and a dearth of artificial intelligence related companies depleted up the listings pipeline.

The number of first-time offerings fell to 32 through the end of September, the lowest nine-month tally since 2012, according to Bloomberg-compiled data. Companies including taxi app provider Go Inc. slid to a four-year low, even as fundraising surged in the rest of Asia.

While companies along the AI supply chain have driven dealmaking around the world, Japan is yet to match the wave of startups that can capture the imagination of investors, like in China. Some IPO hopefuls were also deterred by the Tokyo Stock Exchange’s plan to raise the bar for companies to remain listed in its startup section, as port of its effort to attract more quality issuers.

“More companies decided now is not the time to go public,” said Masahito Watanabe, head of IPO department at Mizuho Securities Co., adding that it takes at least two to three years to prepare candidates for a listing in Japan.

From 2030, the Tokyo bourse will require companies on the Growth Market to have a market value of at least ¥10 billion ($63.2 million) after five years to remain listed, compared with the current requirement of ¥4 billion after 10 years.

That change is also impacting the ability of startups to raise money in the private market, as venture capital funds may be more reluctant to invest with the clear exit route of IPOs becoming more uncertain.

“Banks are being selective and support companies that not only meet the new requirement of the TSE, but also have strong growth potential after listing,” said Reika Matsuda, founding partner of Shiza Ventures Inc.

That said, some bankers and investors expect private equity-backed offerings to give the market a lift in the near term. Bain Capital-owned York Holdings is aiming to list within two years, while KKR-backed Logisteed Ltd. may go public in 2027. Japan Industrial Partners-backed Toshiba Corp. is seeking a return as early as in fiscal 2028, people familiar with the matter have said.

“Considering the sponsored-relisting deals in the pipeline, the IPO market could reach a reasonable scale,” said Hiroaki Shirano, head of private capital solutions at Daiwa Securities Co. “The number of listings would gradually recover as IPO prospects aren’t necessarily decreasing, but I don’t think the number will get back to 100 per year as we used to see.”The country’s largest IPO this year has been the listing of taxi app operator Go, which raised $607 million. KKR & Co.-backed human resources platform operator SmartHR Inc., which is among the few Japanese unicorns, has delayed a potential deal as investors viewed the targeted valuation as too high, people familiar with the matter have said.

While Asia has seen blockbuster IPOs by AI-related names such as CXMT Corp. and Zhongji Innolight Co., with Moonshot AI and DeepSeek aiming its listing early next year, Japan has largely missed out on such deals.

“Capital is still concentrated in private funding rounds for generative AI-related firms,” said Keith Yuki Isobe, Managing Director and Head of Investment at DG Ventures Inc. “As a result, fewer investors are participating in fundraising rounds by unlisted companies in non-AI sectors than they were three or four years ago.”