SoftBank mobile business files for record £16bn float in Tokyo

Alfred Osborne
November 14, 2018

Softbank Group Corp is seeking to raise ¥2.4 trillion (US$21.1 billion) in the initial public offering (IPO) of its Japanese telecom operations next month, raising more capital to fuel investments for its US$100 billion Vision Fund.

The initial public offering (IPO) would be one of the largest of all time and represent a formal split between the telecom arm of SoftBank Corp. and its investment activities, which are channeling funds into a range of technology companies. The company needs to cut down mobile bills to comply with new government requests.

The company is selling 1.6 billion shares for a likely price of JPY1,500 each ($13.17) and will retain about two thirds of the listed unit, which will carry a market value of about JPY7.18 trillion ($63 billion). That is well above Docomo's around 57 percent payout ratio expected in the current fiscal year and KDDI's 39 percent.

"That provides an incentive" for investors at the IPO, he said.

Son has shifted his focus in recent years to concentrate on technology investments, in the wake of successful bets on companies such as Alibaba Group Holding Ltd. and Yahoo! Inc.

Investors have grown nervous about the lack of clarity in some of the investments by the $90bn Vision Fund. Japanese households are commonly seen as an attractive target in IPOs with their 1,829 trillion yen in financial assets, even if they are traditionally risk-averse with over 50 percent of assets in cash and deposits. The price of the listing will be set on December 10.

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SoftBank plans to offer 89 percent of the shares on sale to domestic investors, almost all of which will be targeted at retail investors, people familiar with the matter have told Reuters.

SoftBank has nearly 34 million wireless subscribers in Japan.

Nomura Holdings Inc, Mizuho Financial Group Inc, Deutsche Bank AG, Goldman Sachs Group Inc, JPMorgan Chase & Co and SMBC Nikko Securities Inc are joint global coordinators. The company forecasts 700 billion yen ($6.1 billion) in annual operating profit across all its telecom operations. Docomo earlier this month said it plans to "return" 400 billion yen to customers, while KDDI said it won't follow along because it already introduced lower rates. It will mark the transformation of the parent from a mobile phone network provider - which successfully challenged Japan's incumbent duopoly - into one of the world's biggest technology investors under founder and chief executive Masayoshi Son.

The amount could rise by ¥240.6bn if demand triggers an over-allotment, taking the total closer to the $25bn that Alibaba raised in 2014 in the biggest-ever IPO.

"Through the listing of SB [SoftBank, the telecom unit] shares, SBG [SoftBank Group] expects that the respective roles and valuations of the two companies will be clear", it said.

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