Japan Post seeks to raise $11.6 Billion in IPO

The state-owned logistics company received approval last week for an initial public offering that could be the country’s biggest since NTT Docomo Inc. went public in 1998, according to reports from the Wall Street Journal.    State-owned Japan Post Holdings received approval an initial public offering from the Tokyo Stock Exchange last week through which the company is looking to raise 1.4 trillion yen ($11.6 billion).
   That would make it the Japan’s biggest public float since the mobile telecom company NTT Docomo Inc. went public in 1998, according to reports from the Wall Street Journal.
   The Tokyo Stock Exchange said Japan Post Holdings and subsidiary units Japan Post Bank Co. and Japan Post Insurance Co. are scheduled to list simultaneously on Nov. 4, 2015. Each of the three companies will make about 11 percent of its outstanding shares available for purchase at that time.
   Japan Post Holdings will offer shares at an indicative price of 1,350 yen, which would raise about 668 billion yen in total if all 11 percent is sold. Japan Post Bank will set an indicative price of 1,400 yen a share and Japan Post Insurance will ask 2,150 yen a share, which would equate to about 577 billion yen and 142 billion yen, respectively. The executive board will set final share prices after meeting with investors in October.
   Japan’s government plans to divest as much as two-thirds of Japan Post Holdings starting with the IPO, and eventually plans to sell 100 percent of Japan Post Bank and Japan Post Insurance in multiple phases, according to WSJ.
   The postal market in Japan has been steadily shrinking in recent years due to a decline in population and increased Internet communication. A previous plan to privatize the company was scuttled in 2010.
   Japan has sold off several former state-owned monopolies in the past few decades, including its railway, a telephone company and the state tobacco company.
   Traditionally, Japan Posts’ business operations had been limited primarily to domestic markets, and its growth had been limited as a result. In February of this year, however, the company purchased Toll Holdings, Australia’s largest freight transportation company, for A$6.5 billion (U.S. $5.1 billion). The acquisition of Toll followed Japan Posts’ October, 2014 launch of a joint international parcel delivery service with France’s GeoPost and Hong Kong’s Lenton Group.
   That deal, which was approved by Australia’s Supreme Court of Victoria in May, made Japan Post the fifth largest logistics company in the world by revenue, putting it in direct competition with the likes of CEVA Logistics, DHL, UPS, and FedEx. And the company said at the time it would use Toll’s expertise to make further acquisitions in Asia, Europe and North America.
   Based on the indicative share prices, Japan Post Holdings could have an overall valuation of 6.1 trillion yen (U.S. $50.6 billion), while Japan Post Bank would be valued at 5.2 trillion yen (U.S. $43.1 billion) and Japan Post Insurance at 1.3 trillion yen (U.S. $10.8 billion).