TOKYO, Sept 10, 2015:
The listings of Japan Post Holdings Co plus its bank and insurance units will seek to raise a combined US$11.5 billion (RM49.9 billion) – critical offerings the government hopes will win over retail investors and boost the stock market.
The initial public offerings (IPOs) will be first of three tranches that together are meant to generate more than US$30 billion for reconstruction after the 2011 earthquake and tsunami.
The triple IPOs represent Japan’s biggest privatisation in nearly three decades and will bring to market the nation’s largest bank and largest insurance company by assets.
The debut of Japan Post Bank will also subject one of the world’s biggest institutional investors to market forces.
The bank has already pledged to overhaul the management of its US$1.7 trillion portfolio, potentially having a considerable impact over fund flows into stock and bond markets.
But scepticism abounds over growth prospects for all three companies with both the bank and Japan Post Insurance heavily regulated to protect private sector rivals, while mail services are suffering from declining volume in a digital age.
“I don’t imagine managers of active funds will rush to buy shares of Japan Post companies,” said a fund manager.
“Rather, depending on the dividend yield, those focused on value stocks are likely to be interested, said the person, declining to be identified as his company is owned by a direct competitor to Japan Post Bank.
Around 10% of outstanding shares in each company will be offered, with Japan Post Holding’s offering aiming to raise US$5.5 billion, while the bank and insurance IPOs will seek US$4.8 billion and US$1.2 billion respectively.
Japan’s top government spokesman said the share offers were an opportunity to encourage the shift of household money from bank deposits to equity market investment.
“We are hopeful it will lead to a virtuous economic cycle,” said chief cabinet secretary Yoshihide Suga.
Japan Post Bank will have indicative price of ¥1,400 (RM50) and have the largest market capitalisation of the three at US$52 billion.
The holding company would have a market value of around US$50 billion at its indicative price of ¥1,350. The insurance unit’s tentative price of ¥2,150 would give it a market value of about US$11 billion.
Keenly aware of the need for a strong growth scenario to lure investors, Japan Post president Taizo Nishimuro orchestrated the acquisition of Australian freight and logistics firm Toll Holdings for A$6.5 billion (RM19.7 billion) this year.
But underscoring concerns about growth prospects, Japan Post Holdings said it expects net profit to slide 20% to ¥370 billlion this financial year.
The bank unit said it expects annual net profit to fall 13% while the insurance unit said net income is likely to edge up 3%.
In a move likely to help attract retail investors, the holding company said it plans to double its annual dividend to ¥23 per share.
Around 80% of the three firm’s IPO allocation will go to domestic investors. A finance ministry official said that 95% of the domestic offering will be sold to individuals while all of the overseas portion will go to institutional investors.
Final pricing for the bank and insurance units will take place on Oct 19, and for the holding company on Oct 26. All three will make their market debut on Nov 4.
Eleven companies have been hired as lead underwriters for the offerings with Mitsubishi UFJ Morgan Stanley, Nomura Securities, Goldman Sachs and JPMorgan chosen as global coordinators.