SoftBank Launches Japan’s Biggest IPO Ever


The SoftBank Group Corporation is about to raise 2.65-billion-yen equivalent to USD 23.5 billion, in the largest IPO ever in Japan’ history. The SoftBank Group Corp. stock sale is widely considered to be completing the transition of the national telecom group to becoming a global powerhouse investor in technologies. The telecommunications unit SoftBank recently assessed its stock at 1,500 yen each. The company also announced the sale of all additional shares reserved for excess demand, exceeding the record of 25 billion dollars raised in 2014 by the Chinese e-commerce giant Alibaba Group Holding Ltd., a holding company. of the SoftBank group. The group, which controls the world’s largest technology private equity fund, of nearly $ 100 billion, will soon use these funds to invest in startups ranging from smaller game makers to giants like the American Uber Technologies Inc. The demand was well above the number of shares offered, according to representatives from SoftBank Corp., who also declined to disclose what the actual extent of the demand was. SoftBank Corp’s stocks will reportedly debut on the first section of the Tokyo Stock Exchange on the 19th of December, 2018.

Interruptions in SoftBank’s services

Pricing for IPOs comes just days after Japan’s third-largest mobile phone service provider, in terms of subscribers, experienced a rare interruption of service across the country. SoftBank’ representatives said the disruption would not affect its earnings or dividend forecasts. But other areas of concern abound. The government wants a reduction in mobile tariffs, while competition is expected to intensify with the entry of the e-commerce company Rakuten Inc next year. In addition, Tokyo plans to ban purchases of telecommunications equipment by the Chinese government from Chinese manufacturer Huawei Technologies Co Ltd, according to many sources within the Japanese government. SoftBank has a long relationship with Huawei that includes joint testing of the fifth generation (5G) network technology. It was announced recently that SoftBank will no longer use Huawei equipment for its current network or for 5G. Representatives from the company said that it was a measure taken to closely follow and abide by recent changes in the Japanese government’s policy. Earlier in the IPO process, the SoftBank Group’s ties with Saudi Arabia – whose contribution accounts for nearly half of its huge Vision Fund – had investors worried, after Saudi security forces were involved in the murder of a dissident journalist. The murder was supposedly ordered by the Saudi prince MSB himself, according to Intelligence agencies from many powerful countries.

Attracting investors from retail

SoftBank has offered for sale of nearly 2 billion shares, raising concerns about oversupply, especially as it is widely seen as a mature company with limited growth prospects. The company has allocated more than 80 percent of the sale to domestic retail investors, Softbank sources said. To attract the interest of investors, major domestic subscribers have concluded an unprecedented marketing campaign, including what is believed to be the first television ads in Japan for the IPO of a private company. Retail investors view IPOs as profitable, said Naoto Akashi, the Managing Director of SBI Securities, Japan’s largest online broker and one of the largest underwriters for the domestic portion of SoftBank’s’ IPO. In the most popular IPOs, there are several cases this year in which SBI Securities has received orders worth more than 1 trillion yen for a single transaction during the book creation period, added Akashi while withholding specific details on SoftBank’s IPO. Kazuto Hayashi, the General Manager of startup smartphone brokerage One Tap BUY, said the IPO had also attracted many young investors, some of whom were taking part in an IPO for the first time. SoftBank has likely set its target price at 1,500 yen – rather than a range of different prices, as the standard normally requires, in order to keep its dividend yield among the highest in Japan at 5%

About Ranjith R 93 Articles
Ranjith is now an Independent Research Consultant, A Research Professional with 4+ years of experience and worked for leading market research companies in India.

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