AFP/Reuters
Tokyo


Japan Post has raised $11.6bn in a long-anticipated initial public offering, fresh data showed yesterday, with the shares set to start trading next week after the world’s biggest stock sale this year.
The firm’s holding company said it had priced its shares at ¥1,400 ($11.50) apiece, according to a Tokyo Stock Exchange filing, after its banking and insurance units raised billions of dollars as part of the sale.
The triple listing raised a combined ¥1.43tn ($11.6bn), putting it on track to be the biggest stock sale globally this year and the largest since Chinese online giant Alibaba’s record $25bn IPO in 2014.
Shares in the vast government-owned company, which has about 24,000 offices nationwide, along with its insurance and banking units, will start trading in Tokyo on November 4.
The listing comes amid hopes that moves to privatise what is effectively the world’s biggest bank could improve investor sentiment and spur efforts to cut red tape in Japan’s highly regulated economy.
The firm’s offices also offer services for cash deposits and insurance, and its local branches are where many of Japan’s retirees withdraw their pensions.
The group’s mail delivery unit will remain untouched amid social and political pressure to maintain the status quo, including the presence of post offices across the nation even in the most remote villages. The government of former Prime Minister Junichiro Koizumi split the state-owned behemoth into four units in 2007, to handle deliveries, savings, insurance and counter services at each of its post offices.
The government retained full ownership of the group at first, with plans for the bank and insurance units to go fully private by 2017.
The privatisation project was stalled after the long-ruling Liberal Democratic Party lost power, but was revived after the party returned to power in late 2012.
Privatising Japan Post is an acid test for Prime Minister Shinzo Abe that goes beyond seeking a total of ¥1.4tn ($11.6bn) in proceeds to help fund reconstruction after 2011’s massive earthquake and tsunami. The IPOs are key to Abe’s plans to coax the nation’s savers to shift money into shares, creating a “virtuous economic cycle”, according to government spokesman Yoshihide Suga yesterday.
“There are many retail investors who are attracted to Japan Post’s relatively high dividend yield,” said a fund manager at a Japanese asset management firm, speaking on condition of anonymity. “I don’t hear much demand from overseas investors, but demand from domestic investors looks solid.”
Japan Post hasn’t disclosed subscription levels for the three offers, referring only to “significant demand”. But along with 11 lead underwriters, some 50 smaller brokerages across the country have been hired to sell shares, many complaining their allocations were too small to meet demand from investors looking for safe, if unspectacular, alternatives to utilities.  With only around 10% of each firm now on offer, Japan also hopes to extend strong retail interest into tranches to be sold off in future, eyeing about $33bn in reconstruction funds.
The Japan Post deals are also the latest in a string of national postal service IPOs as debt-burdened countries sell assets. Italy raised about $3.8bn from the sale of close to 40% of Poste Italiane in a Milan market debut set for today.
Japan Post Holdings’ listing price, disclosed in a regulatory filing, is the top of a book-building range set at ¥1,100-1,400. The holding firm’s Japan Post Bank Co and Japan Post Insurance Co arms previously also priced offers at top-of-range levels, with all three due to begin trading on November 4.  The target for Prime Minister Abe and Japan Post is a slice of some $14.3tn in financial assets owned by Japanese households.
Bank of Japan data shows more than half of those assets are held in cash and savings deposits, with mutual funds and stock investments accounting for only 16.3%. By comparison, just 13.2% of US households’ assets are held in cash and deposits, with mutual funds and stock investments accounting for nearly half.
Yet in setting IPO prices, Japan Post and the finance ministry have been at pains to create a stable investment basis, sidestepping potential sharp fluctuations, sources familiar with the matter told Reuters. The sell-off is Japan’s biggest since the IPO in 1987 of Nippon Telegraph and Telephone Corp (NTT) , which went on to see shares slide as the country’s economic bubble burst.