ENERES CO LTD TOKYO (Reuters) - The head of Japanese energy start-up Eneres Co. (>> Eneres Co Ltd), which debuted on Tokyo's stock exchange amid much fanfare in October 2013, has resigned after an independent investigation flagged concerns over its accounting practices.
Eneres shares more than doubled in its first trading day and surged tenfold in the first two weeks after debut amid enthusiasm over Prime Minister Shinzo Abe's economic strategy and the promise of energy market deregulation.
But the stock plunged in October this year when a blogger raised questions about the company's business deals, which led to the setting up of an external investigation committee.
"We have decided to change our chief executive to reflect the deep regret and responsibility we have as a listed company, to acknowledge the serious nature of the situation and to make clear where the responsibility lies," the company said in a statement at the weekend announcing the departure of Motohide Ikeda.
The company also promised to improve governance by hiring more outside board members and reinforcing compliance.
Eneres sells power management systems and electrical equipment designed to cut usage. The company quickly became popular with individual investors who hoped it would benefit from electricity market reforms promised by Abe in the wake of the Fukushima nuclear disaster.
The investigation, led by external lawyers, found the company lacked internal controls, raising questions over whether it should have been allowed to list on the Tokyo Stock Exchange's "Mothers" board for start-ups.
Nomura Holdings (>> Nomura Holdings, Inc.) was the lead underwriter in its initial public offering. The bank declined to comment on Monday.
A report summarizing the investigation committee's findings, published earlier this month, said Ikeda had signed business deals without properly vetting counterparties or consulting with the company's board.
As a result of the investigation, Eneres revised its past earnings results and changed its full-year forecast to a loss of 2.15 billion yen (11.51 million pounds) from a profit of 1.27 billion yen earlier this month. It cut its sales forecast to 34.9 billion yen from 43.4 billion yen.
The company's shares rose 20.6 percent to 469 yen on Monday after Eneres said Ikeda would be replaced by Norio Murakami, former president of Google Japan, but remain down around 80 percent from their peak at the start of the year.
(Reporting by Antoni Slodkowski and Ritsuko Ando; Editing by Alex Richardson)
