- Holding company may have weaker growth prospects than units
- Rare for IPOs to be advertised on television in Japan
Japan Post Group’s underwriters are undertaking a second television advertising campaign for its triple initial public offering as part of efforts to attract investors to shares of the parent company before it’s priced next week.
In an unusual move, spot commercials are running on nationwide television this week until Friday, when underwriters will finish taking orders for the shares of state-owned Japan Post Holdings Co., according to officials from global coordinators of the sale. The advertisements, which were first screened in September before the bookbuilding began, were commissioned by the 60 brokerages that are working on the deal, the officials said.
Demand for the 1.4 trillion yen ($12 billion) IPO has been strong so far, with the banking and insurance units priced at the top end of marketed ranges on Monday. It’s rare for IPOs to be advertised on television in Japan, especially during the bookbuilding process, and the repeat screening is taking place amid concerns that the holding company may have weaker business prospects than its subsidiaries.
“There are some investors who have doubts about the parent company’s growth outlook,” Kazumi Tanaka, an IPO analyst at DZH Financial Research Inc. in Tokyo. “The underwriters must be carrying out the TV advertising in a bid to lure more orders from investors.”
The 30-second commercial captures a scene of rural tranquility and tradition. It shows three generations of a Japanese family happily drinking tea and eating cakes while sitting on a sunlit veranda overlooking a rice field. A dog yawns as a cat strolls across tatami mats. The narration says, “Are you all talking about the triple listings of Japan Post by any chance?”
Most of Japan Post’s profit comes from its two financial units, which the government plans to eventually divest entirely. The holding company is shifting the focus of the postal service to logistics and package delivery as the volume of letters and postcards declines due to the advent of electronic communication and the shrinking population.
Nomura Holdings Inc., Mitsubishi UFJ Morgan Stanley Securities Co., Goldman Sachs Group Inc. and JPMorgan Chase & Co. are the global coordinators. Spokesmen for the four firms and Japan Post declined to comment.
The underwriters held seminars for individuals in Tokyo, Osaka and 10 other cities before the bookbuilding. The Ministry of Finance is offering 80 percent of the IPO to domestic investors, mainly individuals, and 20 percent to overseas institutions.
About 11 percent of the three companies will be sold in the IPO, which is set to be Japan’s biggest state asset sale since Nippon Telegraph & Telephone Corp. in 1987. The holding company will be priced on Oct. 26 and list on Nov. 4 along with its two units.
Orders for shares of all three companies exceeded supply after the first two days of bookbuilding, people with knowledge of the matter said last week. Investors offered to buy shares in the bank and insurer for more than their IPO prices on Tuesday, according to brokers ReOrient Group Ltd. and Churchill Capital Ltd.
“The advertisement could draw nationwide attention, and investors who were unable to obtain the shares in the bookbuilding may go to the secondary market to buy them,” said Tanaka. “It’s crucial for the government that the opening price exceeds the IPO price and the share values will be sustained after the debut.”