Softbank’s Son looks to raise $21 bn in IPO to fund tech deals
TOKYO: Softbank Group Corp. founder Masayoshi Son is seeking to raise 2.4 trillion yen ($21.1 billion) in an initial public offering (IPO) of his Japanese telecom business that could be the country’s largest IPO yet.
The Japanese technology giant said in a prospectus on Monday it will sell 1.6 billion shares at 1,500 yen apiece in a new entity, Softbank Corp., that will start trading on December 19. At that price, the IPO would surpass the offering of former national carrier Nippon Telegraph & Telephone Corp. in 1987.
Son is listing the company’s cash cow as he transforms Softbank from a telecom operator into a global investment company, with stakes in marquee startups such as Uber Technologies Inc. and Wework Cos. He’s racing to complete the offering as Japan’s wireless industry faces the threat of lower prices, with market leader NTT Docomo Inc. saying it plans to cut rates 40% in response to government pressure. “Market sentiment is not as good as it used to be, and investor appetite may not be so strong,” said Yasuhide Yajima, chief economist at NLI Research Institute in Tokyo. “Still, their focus is on data, AI and communication — industries where they can anticipate growth.”
Softbank is looking to tempt investors with a dividend payout ratio of about 85% of net income, according to the filing. Based on net income in the last fiscal year, that would work out to an almost 5% yield at the indicated IPO price.
“The dividend payout ratio is very high,” said Masahiko Ishino, an analyst at Tokai Tokyo Research Center. “That provides an incentive.”
Son has shifted his focus in recent years to concentrate on technology investments, in the wake of successful bets on companies such as Alibaba Group Holding Ltd. and Yahoo! Inc. His $100 billion Vision Fund is the largest technology investment fund ever, and he has said he plans to establish similar sized funds every two to three years.
The Japan wireless business, valued at 7.18 trillion yen at the indicated price, would provide additional money for such deals. After the public listing Softbank Group, the parent, will hold about 63% of the wireless unit.