Japan Post IPO sees bank, insurer shares offered at top prices

Postal service shares are mostly targeted at citizens as part of Prime Minister Shinzo Abe's goal to get people to invest more of their savings.
Postal service shares are mostly targeted at citizens as part of Prime Minister Shinzo Abe's goal to get people to invest more of their savings.PHOTO: REUTERS

TOKYO • Shares in Japan Post Holdings' banking and insurance units were priced at the top of marketed ranges as part of a three-pronged initial public offering, signalling strong demand for the nation's biggest privatisation deal since the 1980s.

Japan Post Bank shares were offered at 1,450 yen apiece (S$16.80) and Japan Post Insurance was priced at 2,200 yen, a Ministry of Finance filing showed yesterday.

Bloomberg calculates that the government will raise 743 billion yen from the sales of the units.

The price for the holding company will be decided next Monday.

Investors shrugged off a two-month stock market slump to make orders that exceeded the amount of stock on offer after only two days, people with knowledge of the matter said last week.

Prime Minister Shinzo Abe's government is seeking to raise as much as 1.4 trillion yen in the world's largest IPO this year.

The banking arm had been offered at a range of 1,250 yen to 1,450 yen a share, and the insurer had been priced at 1,900 yen to 2,200 yen. The holding company is being offered at 1,100 yen to 1,400 yen. The three companies will list on Nov 4.

Shares in the postal service, whose origins date back to 1871, are mostly being offered to citizens as part of Mr Abe's goal to get people to invest more of their savings.

 Foreign institutions have been allocated 20 per cent. Some of the proceeds will be used to rebuild areas in the north-east that were damaged by the 2011 earthquake and tsunami. About 11 per cent of the three companies will be sold in the IPO, which is set to be Japan's biggest state asset sale since Nippon Telegraph and Telephone Corporation in 1987.

The bank and insurer will eventually be fully divested following later offerings, and at least a third of the holding company will remain owned by the government.

Japan Post Bank, the biggest holder of deposits in the country, is valued at 6.5 trillion yen, according to Bloomberg calculations based on the price disclosed yesterday.

That is the same as Sumitomo Mitsui Financial Group, the country's second-biggest lender by market value. The postal bank is priced at 0.47 times the book value of its assets, calculations based on the IPO prospectus show.

That is cheaper than the 0.7 times average at Japan's three largest banks.

Japan Post Insurance, the nation's largest insurer by assets, is valued at 1.3 trillion yen. It is worth 0.67 times the book value of its assets, compared with 0.69 times at Dai-ichi Life Insurance, the nation's largest publicly traded life insurer.

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A version of this article appeared in the print edition of The Straits Times on October 20, 2015, with the headline 'Japan Post IPO sees bank, insurer shares offered at top prices'. Print Edition | Subscribe