Japan seeks $5b from Kyushu Railway listing

The company offers a wide range of rail services, including luxury cruise train Seven Stars in Kyushu (above). It also runs hotels and restaurants.
The company offers a wide range of rail services, including luxury cruise train Seven Stars in Kyushu (above). It also runs hotels and restaurants.PHOTO: JR KYUSHU

Govt asset sale set to create world's 2nd-largest IPO this year

TOKYO • Japan's government is aiming to raise as much as 392 billion yen (S$5.2 billion) selling shares of Kyushu Railway in an initial public offering poised to become the world's second-largest this year.

The Japan Railway Construction, Transport and Technology Agency - which fully owns the company, also known as JR Kyushu - is offering 160 million shares at an indicative price of 2,450 yen apiece, according to a statement in Tokyo yesterday.

It is selling all its shares, and plans to list them on the Tokyo Stock Exchange on Oct 25 and the Fukuoka Stock Exchange the day after, according to the statement.

The offering is part of a plan rolled out in the 1990s to privatise the nation's train operators created from the breakup of Japan National Railways in 1987. JR Kyushu is the fourth of those firms selling shares to the public, and the IPO would be the year's largest after that for the Postal Savings Bank of China, which is seeking up to US$8.1 billion (S$11.1 billion) in a Hong Kong share sale.

"This will be a big issue," said Mr Senri Sasahara, an individual investor who is also chief executive of Innovative Advisor, which advises on takeovers and mergers. "JR Kyushu is quite innovative. That will be appreciated by investors."

Mr Sasahara said he would consider buying the shares.

Record visitor arrivals are benefiting firms such as JR Kyushu, which runs both bullet and regular trains, as well as hotels and restaurants, on the nation's third-largest island.

The government will set the price range on Oct 6 and the final price on Oct 17, according to the statement. Line - Japan's most popular mobile messaging service, which announced an IPO in June - set an indicative price of 2,800 yen initially before selling the shares at 3,300 yen apiece.

The government's asset sales are aimed at encouraging citizens to invest more of their household savings in the stock market. It sold shares in Japan Post Holdings, Japan Post Bank and Japan Post Insurance last year in the biggest programme since 1987.

Nomura Holdings, Mitsubishi UFJ Morgan Stanley Securities and JPMorgan Chase are global coordinators for JR Kyushu's IPO, while SMBC Nikko Securities and Goldman Sachs Group will also lead the global offering.

JR Kyushu expects net income of 38.2 billion yen for the year ending March 31 next year, with sales forecast to increase 0.2 per cent to 379 billion yen. The train operator had a net loss of 433 billion yen in the last fiscal year, as it booked a one-time cost of 479 billion yen for depreciation of railway assets.

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A version of this article appeared in the print edition of The Straits Times on September 16, 2016, with the headline 'Japan seeks $5b from Kyushu Railway listing'. Print Edition | Subscribe