Japan Post Bank, Insurance Units Priced at Top of Range for IPO

  • Government to raise 743 billion yen from sales of two units
  • Signals strong demand ahead of triple listing next month

Japan’s government sold shares in Japan Post Holdings Co.’s banking and insurance divisions at the top end of marketed price ranges, signaling strong investor demand for the nation’s biggest privatization since the 1980s.

Japan Post Bank Co. shares were offered at 1,450 yen apiece and Japan Post Insurance Co. was priced at 2,200 yen, a Ministry of Finance filing showed Monday. The government will raise 743 billion yen ($6.2 billion) from the sales of the units, according to Bloomberg calculations. The price of shares in the holding company, the biggest part of the three-pronged initial public offering, will be set on Oct. 26.

Investors shrugged off a two-month stock-market slump to make orders that exceeded the amount of stock on offer after only two days, people with knowledge of the matter said last week. Prime Minister Shinzo Abe’s government is seeking to raise as much as 1.4 trillion yen selling Japan Post, the world’s largest IPO this year.

The banking arm had been offered at a range of 1,250 yen to 1,450 yen a share, and the insurer had been marketed at 1,900 yen to 2,200 yen. The holding company is being offered at 1,100 yen to 1,400 yen. All three companies will list on Nov. 4.

Invest Savings

Shares in the postal service, whose origins date back to 1871, are mostly being offered to citizens as part of Abe’s goal to get people to invest more of their savings. Foreign institutions have been allocated 20 percent. Some of the proceeds will be used to rebuild areas in the northeast that were damaged by the 2011 earthquake and tsunami.

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 bank and insurer will eventually be fully divested following later offerings, and at least a third of the holding company will remain owned by the government.

Japan Post Bank, the biggest holder of deposits in the country, is valued at 6.5 trillion yen, according to Bloomberg calculations based on the price disclosed Monday. That’s the same as Sumitomo Mitsui Financial Group Inc., the country’s second-biggest lender by market value. The postal bank is priced at 0.47 times the book value of its assets, calculations based on the IPO prospectus show. That’s cheaper than the 0.7 times average at Japan’s three largest banks.

Koizumi’s Legacy

Japan Post Insurance, the nation’s largest insurer by assets, is valued at 1.3 trillion yen. It is worth 0.67 times the book value of its assets, compared with 0.69 times at Dai-ichi Life Insurance Co., the nation’s largest publicly traded life insurer.

Former Prime Minister Junichiro Koizumi first drove the sale plans a decade ago, arguing that the assets would be deployed more efficiently in private hands. The bank, among the biggest holders of Japanese government bonds, is already starting to shift to other securities to boost returns. It has applied for permission to lend to home buyers and companies, a move that would increase competition with Japan’s more than 100 banks.

About 60 firms are working on the IPO. Nomura Holdings Inc., Goldman Sachs Group Inc., Mitsubishi UFJ Morgan Stanley Securities Co. and JPMorgan Chase & Co. are the global coordinators.

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