June 25 (Bloomberg) -- Suntory Beverage & Food Ltd. is set to raise as much as 388.1 billion yen ($3.96 billion) in Japan’s biggest initial public offering this year after pricing near the low end of its range as volatile markets curbed demand.
The Tokyo-based soft-drinks unit of Suntory Holdings Ltd. priced its shares at 3,100 yen each, it said in a regulatory filing yesterday. That compares with the range of 3,000 yen to 3,800 yen it announced last week for the sale of as many as 125.2 million shares, including over allotment.
Suntory is pricing the IPO after Asian markets have tumbled on concerns global stimulus will be cut and Japan’s benchmark Topix index has dropped about 6 percent in the last two months as Prime Minister Shinzo Abe’s growth strategy disappointed investors. Companies including Hopewell Hong Kong Properties Ltd. and Macau Legend Development Ltd. have scrapped or delayed new stock issues because of poor market conditions.
“We decided the price on the back of a very volatile market, so it was tough for the IPO,” Suntory Beverage spokeswoman Tazuko Ikeda said by phone.
Suntory Beverage last week set the widest price range for a Japan IPO of above $1 billion in at least five years. The share sale is the North Asian nation’s biggest since Japan Airlines Co.’s 663 billion yen offering in September, according to data compiled by Bloomberg. Suntory Beverage is scheduled to list in Tokyo on July 3.
The benchmark Topix index has lost 7.6 percent since May 29, when the Suntory unit gave its tentative IPO price of 3,800 yen. All the 23 other Japan IPOs this year were priced at the top of their range, according to data compiled by Bloomberg.
“I think it’s good timing,” said Mitsushige Akino, executive director at Ichiyoshi Asset Management Co. in Tokyo. “The stock price will rise from now so it will be good for Suntory’s IPO.”
The share sale was more than three times oversubscribed by domestic investors and almost two times oversubscribed by those from overseas, said Tetsuo Ichimoto, a spokesman for Suntory Beverage. Without over allotment, Suntory is selling 119 million shares valued at about 369 billion yen.
Suntory, a household name in Japan, sells brands such as Orangina soda and plans to use the IPO proceeds to make acquisitions and strengthen operations. The newly listed unit plans to double its sales to 2 trillion yen by 2020, it said in December.
A closely held Japanese whiskey and beer maker, parent Suntory Holdings has focused overseas acquisitions on non-alcohol beverages over the past five years and has set up a department within the listing unit to explore deals. The alcohol unit will remain unlisted.
Japanese rivals Asahi Group Holdings Ltd. and Kirin Holdings Co. have also sought growth overseas as a declining population damps domestic demand. Suntory had a 20 percent market share in Japan’s non-alcoholic drink market in 2012, the second biggest after Coca-Cola Co.’s 28 percent, according to researcher Inryosoken.
Under the leadership of Nobutada Saji, a grandson of founder Shinjiro Torii, the family-controlled business has expanded vigorously outside Japan. The company is known for its motto ‘Yatteminahare’ or “go for it,” the slogan created by its founder.
Actor Bill Murray’s character in the 2003 film ’Lost in Translation’ introduced the name to international filmgoers with the line, “For relaxing times, make it Suntory time.”
Net income at Suntory Holdings will increase 45 percent to 53 billion yen for the year ending Dec. 31, the company forecast in February. Nomura Holdings Inc., Morgan Stanley and JPMorgan Chase & Co. were selected to manage Suntory Beverage’s listing, the company said.
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