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Japan govt launches US$12b follow-up sale of Japan Post Holdings shares

[TOKYO] The Japanese government said it will sell additional shares in Japan Post Holdings Co Ltd worth around US$12 billion, but the offering is expected to struggle to attract healthy demand from institutional investors due to lack of a strong growth story.

Japan Post, with a network of 24,000 post offices and workforce of 400,000 people, has been hurt by a constant decline in mail delivery volume. Its two financial units Japan Post Bank Co Ltd and Japan Post Insurance Co Ltd have been hurt by the nation's ultra-low interest rate environment.

The sale - the first since its postal and financial giant's mammoth IPO in 2015 which also raised about US$12 billion - also comes in the wake of M&A missteps.

It had to write down much of its acquisition of A$6.5 billion (S$7.03 billion) Australian logistics company Toll Holdings Ltd and this year scrapped plans to buy Nomura Real Estate Holdings Inc after failing to agree on terms.

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Including options to sell additional shares in the event of strong demand, the sale could be equivalent to 22 per cent of Japan Post's shares outstanding and worth around 1.3 trillion yen (S$16.1 billion) based on Monday's closing share price of 1,321 yen.

"The company lacks appeal in growth potential. I don't think there will be strong demand from actively managed funds," said Kazuo Okabe, general manager at Fukoku Capital Management.

The price will be determined between Sept 25 and Sept 27, the filing showed.

Japan Post also said it will buy back shares worth up to 100 billion yen.

The government has said it eventually plans to raise US$36 billion through the sale of shares in Japan Post and its two financial units, partly to fund reconstruction of areas in northern Japan hit by a catastrophic 2011 earthquake and tsunami.