decline in IPOs

SoftBank announced it plans to sell $21 billion (2.4 trillion yen) of stock in its mobile telecoms unit, part of Chief Executive Officer Masayoshi Son’s effort’s to reposition the Japanese company as a global technology investor.

The initial public offering would be the largest since Alibaba went public in New York in 2014. SoftBank would have the option to sell another $2.1 billion (240 billion yen), depending on investor demand, which would push the IPO above $23 billion and make it the second-biggest listing of all time, according to data from Dealogic.

At its tentative price per share of 1,500 yen ($13 per share), Softbank’s Japanese mobile division would be valued at $63 billion, leaving SoftBank with 60% of the business. The company said it would make a final decision about the price per share by December 10.

Reuters, citing a person familiar with knowledge of the matter, said more than 80% of the shares would be offered to domestic retail investors.

Masayoshi Son

Shares will begin trading on the Tokyo Stock Exchange on December 19.

The news comes amid an emerging price war among Japan’s mobile operators, with rival NTT Docomo announcing it would cut prices for its cellphone plans by up to 40%. SoftBank is expected to follow suit. The Japanese government has recently called for carriers to lower prices, and it has supported more competition in the wireless industry.

Proceeds from the offering are expected to be used to pay down Softbank’s debt and fund investments. So far, the company has made bets on ride-hailing firm Uber Technologies and e-commerce giant Alibaba Group.

“I think a reasonable amount of money will be attracted to this one,” Tetsutaro Abe, an equity research analyst at Aizawa Securities, said. “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.”

SoftBank launched the $93 billion Vision Fund last year, with nearly half of the money coming from the government of Saudi Arabia.

Photo by Masaru Kamikura via Wikimedia Commons, CC BY 2.0

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