Japan Post Holdings, the stateowned titan that controls both the country’s largest bank and insurance company, is seeking to raise more than $11bn in the world’s biggest share offering this year.
The privatisation, revealed yesterday after months of intense secrecy, has been more than a decade in the making
Shares in the Japan Post parent company, along with Japan Post Bank and Japan Post Insurance, its main subsidiaries, are scheduled to make their market debuts in Tokyo on November 4. It will be Japan’s biggest initial public offering for more than 30 years.
Beyond its sheer size, the listing is symbolic of the change that many reformers believe should have come long ago. For many critics, the creaking, inefficient monolith employing 200,000 staff, whose 24,000 branches gave it a presence in every village, town and city in Japan, was emblematic of much that was wrong with the Japanese system. Its existence suppressed competition in the banking and insurance sectors and its reach made it a vehicle of political patronage and cronyism.
The success of the listing has become increasingly critical to the administration of Shinzo Abe as the prime minister battles to convince the public that his Abenomics growth policies are both sustainable and robust enough to withstand a slowdown in China.
At Y1.39tn ($11.5bn), the Japan Post IPO would be by the far the biggest share sale this year, topping Chinese brokerage Huatai Securities’ $5bn IPO in May, according to Dealogic. It would be the third largest listing in recent years after Alibaba raised $25bn last year and Facebook raised $16bn in 2012.
The listing will hinge on persuading a new generation of Japanese to own shares for the first time. Brokers close to the sale said about 80 per cent of the shares on offer would be sold to the domestic Japanese market. Of that, about 90 per cent will be pitched at retail investors, a balance that suggests that underwriters are less confident of large institutional sales.
Bankers who conducted preIPO meetings with institutional investors in the UK and US this year were “extremely concerned” at the low level of enthusiasm. Final pricing for the bank and insurance units will take place on October 19 and for the parent company on October 26.
As a further signal of the government’s desperation to foist shares in all three Japan Post companies on retail investors, brokers plan to lump the three stocks together and sell them as part of an already existing taxefficient individual savings account programme.
At its indicative price of Y1,350 a share, Japan Post Holdings would have a market value of about $50bn about a quarter the size of Toyota.
Eleven companies have been engaged as lead underwriters for the offerings, of which Nomura Securities, Goldman Sachs, Mitsubishi UFJ Morgan Stanley and JPMorgan have been named as global coordinators.