SoftBank Steps Closer to Transformation With $21-Billion Mobile IPO

SoftBank Group Corp's domestic telecoms unit on Monday received approval to list on the Tokyo Stock Exchange through one of the biggest-ever initial public offerings (IPO) at CNY 2.4 trillion ($21.04 billion/ roughly Rs. 1,53,500 crores), a regulatory filing showed.

The unit, SoftBank Corp, will list on December 19, the filing with the Ministry of Finance showed.

The IPO will mark the transformation of the parent from a mobile phone network provider - which successfully challenged Japan's incumbent duopoly - into one of the world's biggest technology investors under Chief Executive Masayoshi Son.

The offering will provide the group with even more funds that can be deployed into global tech investments. SoftBank's bets so far have been as varied as small gaming startups, ride-hailing firms such as Uber Technologies, and e-commerce behemoth Alibaba Group Holding.

On sale is 1.6 billion SoftBank Corp shares at a tentative price of CNY 1,500 (roughly Rs. 15,700) each, raising CNY 2.4 trillion. The unit will have a market value of CNY 7.18 trillion (roughly Rs. 75,27,440 crores) upon listing.

Additionally, up to 160 million shares worth CNY 240.6 billion (roughly Rs. 2,52,221 crores) will be offered in an overallotment if demand is strong. In that case, the total would come close to the $25 billion (roughly Rs. 1,82,637 crores) worth of shares sold by Alibaba in 2014 in the biggest-ever IPO.

The parent will retain a stake of around two-thirds, depending on the overallotment.

The final IPO price will be determined on December 10.

The mammoth offering comes at a time when investors have begun questioning the outlook for Japan's telecoms companies.

The IPO was initially expected to appeal to investors seeking stability, but the government has recently called on carriers to lower fees while backing more wireless competition, sending shockwaves through the industry.

Yet SoftBank's brand name is still likely to draw retail investors who grew up using SoftBank's phone and internet services. Many still see CEO Son as a tech visionary who challenged entrenched rivals NTT DoCoMo Inc and KDDI Corp and brought Apple's iPhone to Japan.

"I think a reasonable amount of money will be attracted to this one," said Tetsutaro Abe, an equity research analyst at Aizawa Securities. "It's a mobile company so the cash flow is steady. If you think about future yield and shareholder returns, it's a far more attractive investment than government bonds."

Nomura, Mizuho, Deutsche Bank, Goldman Sachs, JP Morgan and SMBC Nikko are joint global coordinators for the IPO.

© Thomson Reuters 2018