TOKYO (BLOOMBERG, REUTERS) - SoftBank Group Corp is seeking to raise 2.4 trillion yen (S$29.09 billion) in the initial public offering of its Japanese telecom operations in December, raising more capital to fuel investments for its US$100 billion Vision Fund.
The Japanese technology giant said in a prospectus on Monday (Nov 12) that it will sell 1.6 billion shares at 1,500 yen apiece in a new entity called SoftBank Corp, which will start trading in Tokyo on Dec 19. At the indicated price, the business is being valued at 7.18 trillion yen.
This is Japan's biggest IPO, topping the listing of the former national carrier Nippon Telegraph & Telephone Corp in 1987. It will mark the transformation of the parent from a mobile phone network provider - which successfully challenged Japan's incumbent duopoly - to one of the world's biggest technology investors under founder and chief executive Masayoshi Son.
Mr Son is listing the company's cash cow to raise capital that can be deployed into global tech investments. SoftBank's bets so far have been as varied as small gaming start-ups, ride-hailing firms such as Uber Technologies, and e-commerce behemoth Alibaba Group Holding.
But the massive offering comes at a time when the wireless unit faces potential pricing pressure. Rival NTT Docomo Inc has announced plans to cut rates 40 per cent in response to government pressure to reduce people's phone bills. At the same time, Japanese web retailer Rakuten Inc is jumping into the market as a budget provider.
Yet SoftBank's brand name is still likely to draw retail investors who grew up using SoftBank's phone and Internet services. Many still see Mr Son as a tech visionary who challenged entrenched rivals NTT DoCoMo Inc and KDDI Corp and brought Apple Inc's iPhone to Japan.
"Market sentiment is not as good as it used to be, and investor appetite may not be so strong," said Mr Yasuhide Yajima, chief economist at NLI Research Institute in Tokyo. "Still, their focus is on data, AI and communication - industries where they can anticipate growth, so investors can't exclude SoftBank from their target."
After the public listing SoftBank Group, the parent, will hold about 63 per cent of the wireless unit.
SoftBank is targeting a dividend payout ratio of about 85 per cent of net income, according to the filing. Mr Son has previously said he was aiming for a higher dividend to provide cash for what has become his main occupation.
The IPO price range will be set on Nov 30, followed by the final price on Dec 10. SoftBank is targeting individuals and will sell the biggest part of the shares to retail investors, people familiar with the matter said earlier this month.
SoftBank forecasts that the domestic telecoms operations, which include wireless, broadband and fixed-line services, will post 700 billion yen in annual operating profit. It has close to 34 million wireless subscribers in Japan.
