JAL Shares Trade Above IPO Price in Grey Market, BTIG Says

Japan Airlines Co. shares traded in the grey market about 7 percent higher than the price set in a 663 billion yen ($8.5 billion) initial public offering, according to BTIG Hong Kong Ltd.

Shares changed hands today at 4,050 yen, up from an earlier trade at 4,025 yen, said Christian Kielland, a Hong Kong-based managing director at BTIG, which managed the deals. That compares with the 3,790 yen IPO price set yesterday. Shares trade in the grey market on a when-issued basis.

The Tokyo-based carrier will begin trading on the city’s stock exchange Sept. 19, becoming the world’s fourth-biggest carrier by market capitalization. The IPO, the biggest since Facebook Inc. (FB), caps a turnaround for the once-bankrupt carrier that included shedding more than a third of workers, cutting routes and retiring older planes.

“The shares were priced at a good level for investors,” said Senri Sasahara, chief executive officer of Innovative Advisor Corp., which advises companies on acquisitions. “We’ll probably see heavy trading when JAL lists next week.”

The carrier was priced at about five times forecast earnings, compared with about 13 times for All Nippon Airways Co. (9202), Japan’s largest carrier. ANA rose 1.1 percent to 182 yen at the 3 p.m. close of trade in Tokyo today. The airline has fallen 15 percent this year.

Selling 97% Stake

The JAL stock was marketed at a range of 3,500 yen to 3,790 yen. Its state-backed parent, Enterprise Turnaround Corp. of Japan, is selling 175 million shares, its 97 percent stake. Demand for shares exceeded the amount on sale, according to JAL, which won’t get any money from the offering.

The airline will list on the first section of the Tokyo Stock Exchange and will surpass ANA as Japan’s biggest carrier by market value following the sale. Globally, it will only trail Latam Airlines Group SA, Singapore Airlines Ltd. and Air China Ltd., according to data compiled by Bloomberg.

Prior to the JAL sale, companies have raised more than 130 billion yen in 23 priced IPOs in Japan this year. That’s little changed from a year earlier, according to data compiled by Bloomberg. Activia Properties Inc. (3279) raised 94.3 billion yen in a sale in May. Facebook raised $16 billion in its New York IPO in May. The shares have since fallen about 50 percent.

To contact the reporters on this story: Darren Boey in Hong Kong at dboey@bloomberg.net; Chris Cooper in Tokyo at ccooper1@bloomberg.net; Kiyotaka Matsuda in Tokyo at kmatsuda@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

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