The Strategist

The Japanese government earns $ 11.6 bln on Japan Post Holdings Co.

09/25/2017 - 15:18

The Japanese government raised about 1.3 trillion yen ($ 11.6 billion) by selling a stake in Japan Post Holdings Co. and having completed the largest in this century public offering of shares of one company in the country, reports Bloomberg.

The shares were sold to Japanese and foreign investors at a price of 1,322 yen per share, which is 2% below the closing price on Monday. Earlier, the Ministry of Finance reported a discount in the range from 2% to 4%.

As previously reported, in 2015 the government of Japan placed shares of Japan Post, as well as the banking and insurance divisions of the company. This transaction allowed attracting 1.4 trillion yen.

Almost two years later, the authorities continued to privatize the giant of postal and financial services - in part to finance reconstruction of the areas in the north-east of the country affected by the earthquake and tsunami in March 2011.

Such factors as the decline in the value of shares, losses due to unsuccessful acquisitions, a reduction in the volume of postal services and low interest rates, which reduce profitability, did not trim demand.

Orders from foreign investors more than doubled the volume of shares offered to them, while demand in Japan was about 1.5-2 times higher than the volume of placement in the domestic market, Bloomberg’s sources state. About 80% of the shares were offered to Japanese investors, mainly individuals, the rest went to institutional investors abroad.

In the conditions of strong demand, a document was distributed on Friday. The paper stated that the Japan Post gives preference to long-term investors and those who have demonstrated their intention to purchase the company's shares at an early stage. The document was issued by the global coordinators of the placement, the agency said.

Shares of Japan Post fell 1% to 1,349 yen at the close of trading on Monday. The value of shares has decreased by 3.6% since November 2015, when the IPO was conducted, compared to the growth of the Topix index by 9.6%.

According to Bloomberg, the deal was the largest public offering of shares in one company in Japan since the sale of Nippon Telegraph & Telephone Corp. shares. by 1.59 trillion yen in 1999.

Joint global coordinators of the transaction were Goldman Sachs Group Inc., Daiwa Securities Group Inc. and Nomura Holdings Inc. 


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