SoftBank sticks to IPO price despite market drop

TOKYO • SoftBank Group Corp set the final price for the ¥2.65 trillion (RM106 billion) initial public offering (IPO) of its Japanese telecom business at its original target, underscoring its confidence in judging demand for as it deals with fallout from a major network outage and a global stocks rout.

The Japanese technology conglomerate fixed the final price for the offering at ¥1,500 apiece, according to a statement yesterday. Including an overallotment of about 160 million shares, SoftBank is selling a total of roughly 1.76 billion shares. The shares of the new entity, SoftBank Corp, will begin trading on the Tokyo Stock Exchange on Dec 19 Founder Masayoshi Son and his bankers dispensed with a price range and chose to set a single preliminary figure last month, betting that they will be able to sell all of the shares in the cash-generating business. While the underwriters were able to cover their entire book by Wednesday last week, a Japan-wide network outage the following day left its 34 million mobile subscribers in the country without services for hours. At the same time, a global stock sell-off has dragged the Nikkei 225 Stock Average down by more than 5% this month.

“The outage may have led some retail investors to change their mind, but not enough to affect the price,” Kyohei Jingu, an analyst at Tachibana Securities Co in Tokyo, said prior to announcement. The stock market rout may somewhat reduce the amount of capital available, “but it’s not likely to cause a major disruption for the offering”.

The outages were caused by a problem with software supplied by Ericsson AB and impacted mobilephone users in 11 countries, including Britain and Japan, according to a statement by SoftBank. After the disruption fuelled outcries on social media and dominated evening news programmes. SoftBank and its bankers held emergency conference calls with institutional investors and extended bookbuilding by an extra six hours in order to address any potential concerns, a person familiar with the plan said.

The telecommunications arm, which will trade on the Tokyo Stock Exchange under the ticker 9434, is a cash-generating business spanning wireless, broadband and fixed-line services. Son is transforming his Tokyo-based company from a telecom operator into a global tech investor, but the listing comes at a time when Japan’s wireless industry has come under pressure from the government to reduce phone bills. The entry of e-commerce giant Rakuten Inc is also raising the risks of a price war next year. — Bloomberg