State-owned Japan Post on Wednesday set indicative price ranges for a trio of initial public offerings in what it hopes to make a ‘must-have’, $12 billion privatization, Japan’s biggest in three decades.
In IPOs set for Nov. 4 squarely targeted at the country’s mom-and-pop investors, Japan Post Holdings Co and two financial units – an insurer and a bank – plan to raise up to 1.4 trillion yen ($11.6 billion) in total. The newly set ranges encompass preliminary prices set last month.
Tokyo is counting on trust in one of Japan’s best-known, most stable companies to propel the IPOs to success, even as fears over China’s economy jangle investor nerves in Asia. With 10 percent of each firm now on offer,Japan hopes to parlay strong retail interest into future sales, eyeing $33 billion to fund reconstruction after 2011’s earthquake and tsunami.
“This is going to be a staple holding of long-term portfolios,” said Gavin Parry, managing director at Parry International Trading brokerage in Hong Kong. “It’s not a regular kind of deal, it’s the biggest IPO so far this century in Japan and everyone’s got to have it.”
The deals also join a series of national postal service listings as debt-burdened countries sell assets to bolster state coffers. Italy hopes to raise up to $4.5 billion from the sale of up to 40 percent of Poste Italiane in a Milan market debut set for the end of October or early November.
Around 80 percent of the three Japan Post IPOs are reserved for domestic investors, with almost all of those tranches to be sold to retail investors. Stockbrokers say early soundings suggest strong interest regardless of price – boosting Prime Minister Shinzo Abe hopes of triggering a long-desired shift of stockpiled domestic savings into shares to stoke Tokyo’s bourse.
Japanese households have $14.3 trillion in financial assets and more than half of them in cash and deposits, the Bank of Japan data shows. But cash and deposits make up only 13.2 percent of U.S. households’ financial assets, the same data shows.
“It’s a one-in-a-thousand opportunity to attract to stock investment people who have never done it,” said Hideo Miyata, director of Imamura Securities, based in the western coastal city of Kanazawa and one of an army of small, locally operating brokerages in the sales syndicate for Japan Post IPOs.
Miyata said he was worried his brokerage won’t secure enough Japan Post company shares to meet all its clients’ demands, given a large number of inquiries with the insurance business the most sought-after. Under terms of the sales, customers can buy any combination of the three stocks, with no discounts available for buying into two or even all three firms.
Book-building for the Japan Post Holdings offer, the biggest of the three at up to 693 billion yen, runs from Oct. 8 through Oct. 23, with a final offering price to be set on Oct. 26. Its official indicative price range of 1,100-1,400 yen per share compares with a preliminary indicative price of 1,350 yen – a price that value the firm at about $50 billion.
Meanwhile Japan Post Bank Co set an indicative price range of 1,250-1,450 yen per share for its IPO, giving it a potential total market value of up to $54 billion. Japan Post Insurance Co set a range of 1,900-2,200 yen, possibly valuing the company at as much as $10.8 billion.
The book-building period for the bank and insurance firms is shorter than for the holding company, running from Oct. 8 until Oct. 16, with final offering prices to be set on Oct. 19.
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.
($1 = 120.0400 yen)
(Additional reporting by Joshua Hunt; editing by Kenneth Maxwell)
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