Japan Post Share Sale Will Use TV Ads to Target IndividualsBy
Most shares to be offered to retail investors, people say
Stock’s underperformance and North Korea crisis cloud offering
Japan Post Holdings Co.’s underwriters will seek to attract retail investors to its estimated 1.4 trillion yen ($12.9 billion) public offering, betting they will shrug off the stock’s slack performance and market anxiety over North Korea.
Most of the shares will be sold to individuals, people with knowledge of the matter said, asking not to be identified before an announcement of the deal as soon as Monday. To help smooth the sale to retail investors, brokerages will start a television campaign to advertise shares in the postal giant as soon as this week, the people said.
Daiwa Securities Group Inc., Goldman Sachs Group Inc. and Nomura Holdings Inc. are among managers of the sale on behalf of the government, which is further divesting its stake two years after Japan Post was listed alongside its insurance and banking units. Finance Minister Taro Aso said last week that his ministry will monitor any impact on share prices stemming from the crisis with North Korea over its nuclear weapons program.
“Markets globally are taking a downturn given the concerns over North Korea, which will be negative,” said Mitsushige Akino, an executive officer with Ichiyoshi Asset Management Co. in Tokyo. “Active market participants -- momentum players who invest in the short term -- won’t buy the stock. But individuals who are relatively wealthy and have bank deposits will.”
Facing a recent slump in their retail business, brokerages are counting on the sale to obtain new accounts from individuals, who still have more than half of their 1,800 trillion yen of financial assets parked in cash.
Officials at global coordinators Daiwa, Goldman Sachs and Nomura declined to comment on the TV campaign and the transaction.
The Ministry of Finance plans to offer about 1 trillion yen to 1.4 trillion yen of Japan Post shares to local and overseas investors in September, people familiar with the matter said last week. That would make it the country’s largest share sale since the three-pronged IPO two years earlier. The government is reducing its stake to raise funds for the reconstruction of areas devastated by the 2011 earthquake and tsunami in northeastern Japan, and to encourage households to invest more of their savings.
“I’m interested in purchasing the shares,” said Tomeo Kawasaki, a 72-year-old pensioner in Aichi prefecture who also bought stock in the IPO. “I feel it’s a secure investment because it’s backed by the government and pays attractive dividends.”
Institutional investors may also be attracted to the stock after Japan Post was last week chosen to be added to the benchmark Nikkei 225 Stock Average. Its Oct. 2 inclusion may prompt passive funds to add the postal company to their portfolios.
It is rare for public offerings to be advertised on TV in Japan, where issuers are prohibited from soliciting securities. Underwriters also produced commercials during the 1.4 trillion-yen IPO of the holding company and its bank and insurer. The 30-second ad showed a family happily drinking tea on a sunlit veranda overlooking a rice field.
About 80 percent of the IPO was allocated to individuals in Japan and 20 percent went to overseas institutions. It proved to be a boost for brokerages’ retail operations, with Nomura adding about 2,500 accounts each day on average in October 2015, almost double the daily average for 2014, people familiar with the matter said at the time.
It may be a tougher sell this time around. Shares of Japan Post have fallen about 4 percent since their November 2015 listing, compared with a 4.6 percent gain in the Nikkei. The stock fell 0.2 percent to 1,341 yen in Monday morning trading in Tokyo. The average 12-month target price of nine analysts is 1,501 yen, according to data compiled by Bloomberg.
Japan Post posted a 29 billion-yen loss in its first full year of operation since the listing, after booking a 400 billion-yen writedown on its investment in Australian logistics company Toll Holdings Ltd. Profit at its banking arm fell as the central bank’s monetary easing crimped interest income.
“Investors’ interest in Japan Post is not that strong because the company relies on its banking and insurance units for most of its profit, and there are risks regarding negative interest rates,” said Masaharu Hirokane, an analyst at Nomura. Still, he added, “the structure of profitability is steady, and it can pay stable dividends.”
— With assistance by Maiko Takahashi