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Japan Post's IPO said to be fully subscribed after two days
[TOKYO] Japan's government received orders for all the shares it's offering in Japan Post Holdings Co and its banking and insurance units after the first two days of bookbuilding, people with knowledge of the matter said.
Investor orders through Oct 9 for shares in the holding company and the bank exceeded the number being offered, while the insurer was several times covered, one of the people said, asking not to be identified because the information is confidential.
The early interest indicates Japan Post will raise at least 1.19 trillion yen (S$14 billion) from the IPO, based on the low end of price ranges announced last week, according to Bloomberg calculations. The demand may make it easier for the postal group to price the offering at the top end of the range, which would raise 1.44 trillion yen and amount to the country's biggest privatisation since 1987.
Japan's government is selling shares in the postal service, whose origins date back to 1871, mostly to citizens as part of Prime Minister Shinzo Abe's goal to get people to invest more of their savings. The IPO, the culmination of privatization plans driven by Abe's mentor Junichiro Koizumi a decade ago, comes at a volatile time for Japanese stocks, which have been rocked by the global market turmoil stemming from China.
The Nikkei 225 Stock Average has fallen about 13 per cent since Aug 11, when China devalued its currency. The Ministry of Finance is offering 80 per cent of the IPO to investors in Japan and 20 per cent to overseas institutions. Some of the proceeds will be used for reconstruction efforts following the 2011 earthquake and tsunami in the northeast.
A spokeswoman for Japan Post said the company has no comment on the IPO. Finance Ministry officials declined to comment.
Final prices for the bank and insurer will be released on Oct 19, and the holding company will be priced a week later. The stocks will be listed on Nov 4. A total of 973 million shares are being offered, including 495 million in Japan Post Holdings, 412 million in the bank and 66 million in the insurer.
Investors may be attracted to the companies' valuations. Even based on the top of the price range, Japan Post Bank Co. would be valued at 0.47 times book, according to calculations based on the prospectus, compared with an average of 0.7 times for the nation's three largest lenders.
Japan Post Bank has more deposits than any other financial institution in the country, which it mostly invests in assets such as government bonds because it's largely restricted from lending. Japan Post Insurance Co, the nation's biggest insurer by assets, is valued at as much as 0.67 times book.
Retail investors attended seminars on the IPO around the country before the bookbuilding began on Oct 8.
"For once in my life, I want to buy the shares of the bank," Yasuji Hattori, 70, who is retired, said after attending one of the meetings in Nagoya on Sept 18. "It will be my first time to invest in any company."
About 60 firms are working on the IPO. Nomura Holdings Inc, Goldman Sachs Group Inc, Mitsubishi UFJ Morgan Stanley Securities Co and JPMorgan Chase & Co are the global coordinators.