World: Gloves off as Hakuhodo squares up to Dentsu.

Japan's number-two agency hopes to raise 30 trillion yen as it goes public in a bid to challenge its rival.

When Hakuhodo DY Holdings Inc (HDY) announced its intention last month to float on the Tokyo Stock Exchange, the holding company's rival Dentsu was very clearly in its crosshairs.

With an initial public offering of 4,198,300 shares of its common stock, Hakuhodo expects to raise significant new capital for growth. Though the section and the price remain undecided, marketers suggest HDY's shares will be listed on the first section at around 6,300 yen, valuing the company at almost 30 trillion yen (dollars 292.9 million).

While the IPO has dominated the Japanese business press, it doesn't come as much of a surprise to the Japanese ad industry. Haku-hodo first indicated its intention to list on the Stock Exchange in 2000. Asatsu-DK, the third-largest domestic advertising agency, has been listed on the TSE since its formation in 1999. Dentsu went public in 2001, piling pressure on the challenger Hakuhodo to follow suit.

However, the decision to float isn't just about the competition. One of the principal triggers for Hakuhodo DY to go public was the high value placed on corporate social responsibility within the Hakuhodo DY corporate culture.

The industry in Japan has been under constant public pressure to become more accountable in its transactions. Many observers believe that once the top three agencies have gone public, the entire industry will move toward more transparent business practices.

Hakuhodo DY Holdings was formed in October 2003, when Hakuhodo merged with Daiko and Yomiko, respectively Japan's second-, fifth- and sixth-ranked advertising agencies. The seeds of Japan's new advertising superpower had been sown two years earlier, when the three agencies combined their media arms.