Published: Wed, November 14, 2018
Electronics | By Kelly Massey

SoftBank Unveils Massive $21 bn IPO Of Japan Mobile Unit

SoftBank Unveils Massive $21 bn IPO Of Japan Mobile Unit

The parent group's founder and chief executive, Masayoshi Son, has said the IPO proceeds will also enable SoftBank to pay down debt and provide a supply of cash for further investment.

A journalist raises her hand to ask a question to Japan's SoftBank Group Corp Chief Executive Masayoshi Son during a news conference in Tokyo, Japan, November 5, 2018.

Based on a tentative offering price of 1,500 yen per share, SoftBank Corp's market value will be about 7.2 trillion yen, making it the eighth-largest listed firm in Japan, immediately above Uniqlo clothing chain operator Fast Retailing Co Ltd.

SoftBank indicated that the IPO price is tentative and a final decision will be made on December 10 ahead of the IPO slated for Dec 19 on the Tokyo Stock Exchange. If things go really well it could even challenge Alibaba for the biggest ever IPO, which would come in handy for a group that is especially exuberant in its spending.

The parent company will retain the rest of the unit's shares.

The parent is investing in a range of companies globally, including USA wireless company Sprint, British IoT company ARM, Chinese e-commerce giant Alibaba and US ride-sharing service Uber.

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The mammoth offering comes at a time when investors have begun questioning the outlook for Japan's telecoms companies.

Amir Anvarzadeh, a senior strategist at Asymmetric Advisors in Singapore, pointed out the valuation of the business is lower than earlier, bullish speculation that it could be worth 9 trillion yen.

Japan's biggest mobile phone network provider, NTT Docomo Inc, has a market capitalisation of 9.6 trillion yen and second-ranked KDDI Corp is at 6.2 trillion yen. More than 80 percent of the shares will be offered to domestic retail investors, a person with knowledge of the matter told Reuters. The company needs to cut down mobile bills to comply with new government requests. "If you think about future yield and shareholder returns, it's a far more attractive investment than government bonds".

"SBG [SoftBank Group Corp.] announces that it has decided on the disposal of a portion of SB [SoftBank Corp.] shares held by SoftBank Group Japan Corporation, a wholly owned subsidiary of SBG". They have also been anxious about the fund's dependence on Saudi Arabia, its biggest backer, following the murder of a journalist by Saudi security officials.

U.S. credit-rating firm S&P Global Ratings said the IPO was credit positive for the parent, saying it expects a bulk of the proceeds to be used to repay debt. The group's interest-bearing debt was almost 18 trillion yen at end-September. SoftBank has picked Nomura Holdings Inc., Goldman Sachs Group Inc., Deutsche Bank AG, Mizuho Financial Group Inc., JPMorgan Securities and Sumitomo Mitsui Financial Group Inc. among joint global coordinators.

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