Japan Plans to Price Japan Post IPO at High End of Range

  • Government to raise 1.44 trillion yen in year's biggest IPO
  • Price for Japan Post Holdings to be announced on Monday

Japan’s government is poised to raise the maximum 1.44 trillion yen ($11.9 billion) sought in the privatization of the nation’s postal service and its banking and insurance units.

Shares of Japan Post Holdings Co. will be priced at or near the top end of a marketed range on Monday, a week after its two financial units were offered at the maximum, said the people, asking not to be named because the deliberations are private. Shares of the parent company had been offered at 1,100 yen to 1,400 yen apiece.

The three-pronged IPO is the world’s biggest since Alibaba Group Holding Ltd. in September 2014, as Prime Minister Shinzo Abe fulfills a plan first drawn up by his mentor and predecessor Junichiro Koizumi 10 years ago. Almost 80 percent of the shares are being sold to individuals as part of Abe’s goal of getting households to invest more of their savings.

Japan Post will make the final decision and announce the pricing later on Monday. Officials at Japan Post and the Ministry of Finance declined to comment. The holding company and its banking and insurance units will list on the Tokyo Stock Exchange on Nov. 4.

Market Rebound

Demand for the shares has been strong as Japan’s stock market rebounds from a slump stemming from China’s equity selloff in August. The Nikkei 225 Stock Average has gained about 4 percent since the IPO plans were announced on Sept. 10. Japan Post Bank Co. shares were offered at 1,450 yen apiece a week ago and Japan Post Insurance Co. was priced at 2,200 yen, both the top end of marketed ranges.

About 11 percent of the three companies will be sold in the IPO, which is Japan’s biggest since NTT Docomo Inc. in 1998 and the country’s largest privatization since Nippon Telegraph & Telephone Corp. in 1987. Some of the proceeds will be used to rebuild areas in the northeast that were damaged by the 2011 earthquake and tsunami.

Italy is also floating its postal service, raising about 3.1 billion euros ($3.4 billion) in the IPO of Poste Italiane SpA after fixing the price at 6.75 euros a share last week.

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. It bought Australian logistics provider Toll Holdings Ltd. for A$6.5 billion ($4.7 billion) this year.

Some 20 percent of the offering was allocated to foreign institutions, and the rest to domestic investors, mostly individuals. The 60 brokerages that managed the IPO took the unusual step of screening commercials on national television during the bookbuilding period for the holding company last week.

Even at the top of the marketed price range, the parent company is the cheapest of the three entities, at 0.41 times the book value of its assets. That compares with 0.47 times for the banking unit and 0.67 times for the insurer. Japan Post Bank has the most deposits in the country and Japan Post Insurance is the nation’s largest insurer by assets.

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