JR Kyushu Shares Said to Jump Above IPO Price in Gray Market

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

Kyushu Railway Co. shares climbed in the gray market before its debut next week, according to people familiar with the matter.

The rail operator changed hands at 2,800 yen and 2,850 yen a share on Tuesday, a gain of as much as 9.6 percent compared with its initial public offering price of 2,600 yen set Monday, the traders said, asking not to be identified because of company policy. The Fukuoka, Japan-based firm, known as JR Kyushu, starts trading on the Tokyo Stock Exchange on Oct. 25 after an IPO set to raise 416 billion yen ($4 billion).

JR Kyushu, the world’s third-largest IPO so far 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. Shares of Line Corp., Japan’s second-largest IPO in 2016, also jumped in the gray market before starting trading on the Tokyo Stock Exchange, where they closed up 32 percent on their first day.

Japan is selling all 160 million shares held by the Japan Railway Construction, Transport and Technology Agency, which fully owns JR Kyushu. The railway operator won’t get any money from the offering. The shares were marketed at a range of 2,400 yen to 2,600 yen.

JR Kyushu, which operates bullet trains, hotels and restaurants on Japan’s third-largest island, will also list in Fukuoka on Oct. 26. Three-quarters of the shares are being sold domestically, with the rest going to overseas investors.

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.

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. is also leading the global offering.

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.

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