SoftBank's IPO to raise $32b with overallotment

SoftBank is widely perceived to be a mature business - and is considered to have relatively slower growth prospects. So its huge number of shares on offer has raised concern of oversupply.
SoftBank is widely perceived to be a mature business - and is considered to have relatively slower growth prospects. So its huge number of shares on offer has raised concern of oversupply.PHOTO: AGENCE FRANCE-PRESSE

Japan telecoms giant's share sale set to be second-biggest ever

TOKYO • SoftBank Corp priced its initial public offering at 1,500 yen per share and will sell an extra 160 million shares to meet strong demand, a regulatory filing showed, raising 2.65 trillion yen (S$32.2 billion) in Japan's biggest IPO.

That makes the share sale one of the largest of all time globally, just shy of the record US$25 billion (S$34 billion) that Chinese e-commerce firm Alibaba Group Holding raised in 2014.

The price set by SoftBank Group Corp's Japanese telecommunications unit was unchanged from the indicative price and its overallotment option will be exercised in full, the filing to the Finance Ministry showed yesterday. The shares begin trading on Dec 19.

The IPO price and overallotment came just days after Japan's third-largest mobile phone network provider by subscriber numbers suffered a rare nationwide service outage. SoftBank said the disruption would not affect its earnings and dividend forecast made on Nov 12.

But other causes of concern abound. The government wants to see a fall in mobile phone charges just as competition is set to increase with the market entrance next year of e-commerce firm Rakuten.

The IPO price and overallotment came just days after Japan's third-largest mobile phone network provider by subscriber numbers suffered a rare nationwide service outage. SoftBank said the disruption would not affect its earnings and dividend forecast made on Nov 12.

Moreover, sources told Reuters that Tokyo plans to ban government purchases of equipment from China's Huawei Technologies - a telecommunications infrastructure firm with which SoftBank has a long relationship.

SoftBank conducted trials of fifth-generation network technology in partnership with Huawei - the first Chinese firm to join Japan's conservative Keidanren business lobby, in 2011.

 

To stimulate interest in SoftBank's IPO among retail investors, the deal's domestic lead underwriters have pursued an unprecedented marketing campaign, including what are believed to be Japan's first TV advertisements for a private firm's IPO.

SoftBank is widely perceived to be a mature business - and so is considered to have relatively slower growth prospects - and the huge number of shares on offer has raised concern of oversupply. Still, brokerages said they would be able to attract enough investors with SoftBank's dividend alone.

Its 5 per cent dividend yield - a percentage of dividend income against the stock price - is among the highest in Japan.

Brokerages said SoftBank likely set the indicative price of its shares at 1,500 yen - rather than a price range, as is the norm - to keep its dividend yield at 5 per cent.

REUTERS

A version of this article appeared in the print edition of The Straits Times on December 11, 2018, with the headline 'SoftBank's IPO to raise $32b with overallotment'. Print Edition | Subscribe