Photographer: Akio Kon/Bloomberg

JR Kyushu Prices IPO at Top End of Range to Raise $4 Billion

  • Price set at 2,600 yen a share; Tokyo listing on Oct. 25
  • Biggest this year after Postal Savings Bank of China, Innogy

Japan’s government is set to raise 416 billion yen ($4 billion) from the initial share sale of state-owned Kyushu Railway Co. after pricing the stock at the top end of a marketed range.

The shares will be sold at 2,600 yen each, compared with the offered range of 2,400 yen to 2,600 yen, according to a filing on Monday. Japan is selling all 160 million shares held by Japan Railway Construction, Transport and Technology Agency, which fully owns JR Kyushu.

The IPO, set to be the world’s third-biggest this year, is part of Prime Minister Shinzo Abe’s efforts to encourage citizens to invest some of their 1,700 trillion-yen household savings in the stock market. JR Kyushu’s IPO follows debuts in the 1990s by East Japan Railway Co. and Central Japan Railway Co. after the breakup of state-run Japan Railways in 1987.

For a story on how Japan is encouraging retail investment in stocks, click here.

Shares of JR Kyushu, which operates bullet trains, hotels and restaurants on Japan’s third-largest island, are scheduled to list Oct. 25 in Tokyo and the following day in Fukuoka. Three-quarters of the shares are being sold domestically, with the rest offered to overseas investors. Japan aims to sell more than half 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 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. The shares will list on the first section of the Tokyo Stock Exchange, one of five markets it operates and where most large companies are listed, according to the Japan Exchange Group.

The company has proposed a dividend of 37.5 yen for the six months through March and is offering fare discounts to potential investors to help boost demand for the offering. 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.

The world’s largest IPO this year was by Postal Savings Bank of China Co., which raised $7.4 billion in a Hong Kong share sale last month, while Innogy SE raised about $5.1 billion in Frankfurt this month.

— With assistance by Takako Taniguchi

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