Japan Post is moving forward with the sale of a $ 9 billion tranche of shares, marking the last step in a difficult privatization process that began in 2005 and has involved political unrest, a sales scandal abuse of insurance, a collapse in stock prices and a disastrous expansion abroad.
People close to the large company, whose listed subsidiaries include one of Asia’s largest life insurers and a bank that was at one time the world’s largest financial institution, said the company was preparing to step up. a global search for alternatives, higher productive assets such as real estate.
In a statement on Wednesday, Japan Post said the government plans to sell up to 1.03 billion of its shares, 75 percent of which will be sold to domestic investors – mostly individuals – and the rest to foreign institutions. . The process will leave the Japanese government as the largest shareholder with a 33 percent stake.
Daiwa Securities will act as the lead underwriter of a sale that brokers and ad industry executives expect will be involved in the effort will require a call for patriotism and nostalgia from the potential investors, rather than an expectation that stocks will outperform in the longer term.
Since the first tranche of Japan Post was sold with great fanfare during the IPO in 2015, shares of the holding company, bank and insurer have significantly underperformed the rest of the Tokyo market. .
“Eighty percent of IPOs in 2015 went to individuals. Since then, the stock has underperformed Topix by 58%. It dropped 47%, so you would have been better off putting half of your money in a time capsule and burning the rest, ”said Nicholas Smith, CLSA strategist.
Basic postal delivery service is in structural decline, and the company’s efforts to expand overseas – via the $ 5 billion acquisition of Toll in Australia in 2015 – resulted in sharp depreciation and disbandment. disorderly business.
People close to the company said that in recent years it has explored a number of possible acquisitions abroad, some of which remain on the table.
Japan Post cannot easily cut costs because of its commitment to maintaining a universal postal service. His bank, on the other hand, is legally restricted from engaging in certain activities and operates in an environment where credit spreads have been declining for many years.
Japan Post Insurance was involved in a sell-out scandal that came to light in 2019.
The latest offer will be valued at the end of this month, but based on Wednesday’s closing price. The government is expected to raise around 952 billion yen ($ 8.5 billion) through the sale. The money will be used for reconstruction efforts related to the Tohoku earthquake in 2011.
Japan Post said it will also repurchase up to 100 billion yen of its own shares as part of the offer.