Photographer: Carl Court/Getty Images

Japan Seeking Up to $4 Billion From Kyushu Rail Share Offering

  • Japan sets IPO price range of 2,400-2,600 yen per share
  • JR Kyushu sale final price to be announced on Oct. 17

Japan’s government is seeking as much as 416 billion yen ($4 billion) for shares in state-owned Kyushu Railway Co. in the world’s second-largest initial public offering this year.

Shares are being offered from 2,400 yen to 2,600 yen each, compared with an indicative price of 2,450 yen announced last month, according to a statement from the Fukuoka, Japan-based company. Japan had earlier said it was selling all 160 million shares held by Japan Railway Construction, Transport and Technology Agency, which fully owns JR Kyushu.

The JR Kyushu IPO follows the government’s sale of shares in Japan Post Holdings Co. last year as Prime Minister Shinzo Abe aims to encourage more citizens to invest part of their 1,700 trillion-yen household savings in the stock market. The IPO is the nation’s largest rail share sale in more than a decade and follows debuts in the 1990s by East Japan Railway Co. and Central Japan Railway Co., which have profit margins that rival Apple Inc.

Japan is set to reveal the final price on Oct. 17 and the Tokyo listing is scheduled for Oct. 25. The operator of bullet trains, hotels and restaurants on Japan’s third-largest island has proposed a dividend of 37.5 yen for the six months through March and is also offering fare discounts to potential investors to help boost demand for the offering.

The sale is part of a government plan started in the 1990s to privatize the nation’s train operators created from the breakup of Japan Railways in 1987.

Three-quarters of the shares are being sold domestically, with the remaining quarter being offered to overseas investors. Japan is aiming to sell more than half of the shares to individual investors and held eight of 10 investor presentations on the island of Kyushu.

Nomura Holdings Inc., Mitsubishi UFJ Morgan Stanley Securities Co. and JPMorgan Chase & Co. are global coordinators for the company’s IPO, while SMBC Nikko Securities Inc. and Goldman Sachs Group Inc. will also lead the global offering.

JR Kyushu, which gets most of its profits from real estate and station building businesses, is the fourth of the JR firms selling shares to the public and the IPO would be the biggest for 2016 after Postal Savings Bank of China Co., which raised $7.4 billion in a Hong Kong share sale last month.

Based in Fukuoka City, about 890 kilometers (550 miles) southwest of Tokyo, the railway is benefiting from record overseas visitors to Japan, spurring demand for its services. Visitors to Kyushu from overseas reached 2.8 million last year, more than doubling from 1.3 million two years earlier, according to the transport ministry.

JR Kyushu predicts net income of 38.2 billion yen in the year ending March 31, with sales forecast to increase 0.2 percent to 379 billion yen.

Before it's here, it's on the Bloomberg Terminal.