The Strategist

Japan will hold the world's second largest IPO in 2016

09/15/2016 - 14:53

Government of Japan intends to earn 392 billion yen ($ 3.8 billion) on sale initial public offering (IPO) of railway company Kyushu Railway Co. Thus, this placement could become the second largest this year, reports Bloomberg.

The Japanese government said is an official statement that the Japan Railway Construction, Transport and Technology Agency y (JRTT), wholly owned by Kyushu Railway (JR Kyushu), is ready to offer 160 million shares at an indicative price of 2.45 thousand yen per share.

The agency plans to sell all of its shares, and to include them in list of shares of the Tokyo Stock Exchange on October 25, and in the stock exchange in Fukuoka - the next day.

JR Kyushu is the fourth company that intends to conduct a public offering of its shares. This accommodation will be the second largest after IPO of China Postal Savings Bank.

According to experts, this is one of the biggest issues of securities since JR Kyushu is an innovative company, highly valued by investors. It is expected that investors will show interest in purchase not only stocks, but also high-speed trains and JR Kyushu hotels located nearby railway stations.
Selling such a large state-owned asset is part of a plan for privatization of the national operator of rail transport in Japan. This started back in the 1990s after splitting up of JNR company in 1987. Three profitable company, formed after that, held an IPO as early as the 90s. JR Kyushu, serving thinly populated areas, had difficulties in closing non-profitable areas because of possible political complications. However, the company still managed to become profitable by building successful businesses associated with upgrade of passenger buildings and their subsequent commercial lease.

The offering will be coordinated by Nomura Securities, Mitsubishi UFJ Morgan Stanley (NYSE: MS) Securities and JP Morgan Securities. The IPO continues follows $ 12-billion-dollar IPO of Japan Post Holdings and its two financial units in November last year.

Meanwhile, state-owned Postal Savings Bank of China, included in the top 30 largest banks in the world, is preparing to launch a public offering of its shares on the Hong Kong Stock Exchange in the amount of $ 8.1 billion.

China Postal Savings Bank (PSBC) is a commercial retail bank providing basic banking services. A large proportion of bank customers is small and medium sized enterprises, agricultural companies and individuals with low incomes. PSBC has 40,000 branches, covers all regions of China.

PSBC was established with an initial capital of $ 20 billion in 2007. Nowadays, PSBC has 1.5 billion deposit accounts of clients. The PSBC is the second bank by the number of branches.

IPO of Postal Savings Bank of China is planned to be held on 20 September, access to the bids is scheduled for September 28. More than ¾ of issued shares will go to five main investors: China Shipbuilding Industry Corp. (more than $ 2 billion), Shanghai International Port ($ 2 billion), HNA Group ($ 1,1 billion), State Grid Corp. ($ 300 million), bank Edmond de Rothschild Group ($ 50 million).