SoftBank Group Corp, one of the top companies in Japan is set to raise billions of dollars which will come in the form of an initial public offering (IPO) that they have just gotten approval for.
They hope to raise 2.4 trillion yen, which is the equivalent of around $21 billion, so that they can move from just being a domestic telecommunications group to a truly global tech company.
The news for the IPO has already made waves. This IPO is one of the biggest in the world.
If it pushes through and is successful, the company will be able to pay off all of its debts and also be able to invest in innovation that it will need to become competitive in the global market. SoftBank’s current investments right now consist of some small startups in gaming, e- commerce, and ride-hailing.
Bloomberg Markets and Finance
The company hopes to raise the money by selling around 1.6 billion SoftBank shares which Japanese investors are very eager to get their hands on. The current price is at 1,500 yen for each, but with the company’s prospects, a lot of people are expecting the share price to go up. People are already comparing it to the Alibaba IPO in 2014 which raised $25 billion for the Chinese e-commerce company.
Only the initial approval for the IPO has been confirmed as of now. For final share prices, Japanese investors will have to wait till December 10. SoftBank will be listed on the Tokyo Stock Exchange by December 19. The company is currently valued at 7.18 trillion yen – which is a trillion more than its closest competitor in the market, KDDI. For the IPO, the company will hold two-thirds of the shares to retain control of the company.
Japanese Investors Get 90 Percent Of IPO
This IPO comes at the right time. A lot of investors have become doubtful of the potential for growth in Japanese telcos. This is because the Japanese government recently asked carriers to lower fees and pushed for stronger wireless competition. With their future in doubt, SoftBank will appreciate getting a massive financial boost from the IPO.
The SoftBank brand will be powerful enough to attract investors. Many Japanese investors will be familiar with the name and the fact that its CEO Masayoshi Son led the company to challenge the entrenched players in the domestic telco industry to carve a large part of the market itself. With 90 percent of the share being offered domestically, many analysts are predicting a successful IPO.
In a statement, Tetsutaro Abe, an equity research analyst at Aizawa Securities, said
I think a reasonable amount of money will be attracted to this one. It’s a mobile company so the cash flow is steady. If you think about future yield and shareholder returns, it’s a far more attractive investment than government bonds
