Banker fees on Ja­pan Post deal beat JT sale

The Star Malaysia - StarBiz - - Foreign News -

TOKYO: Ja­pan’s govern­ment will pay higher fees to banks man­ag­ing its sale of a US$12bil stake in Ja­pan Post Hold­ings Co than it did when di­vest­ing Ja­pan To­bacco Inc (JT) four years ago, re­flect­ing the ad­di­tional chal­lenge for un­der­writ­ers, ac­cord­ing to sources.

Bro­ker­ages will get 0.76% of the amount sold to retail in­vestors and 0.56% of­fered to in­sti­tu­tions, said the peo­ple, who asked not to be iden­ti­fied dis­cussing pri­vate deal terms. That will earn them as much as 9.3 bil­lion yen (US$84mil).

The over­all fees work out to about 0.7%, more than the 0.5% paid by the Min­istry of Fi­nance when it sold a stake in JT in 2013, ac­cord­ing to Bloomberg cal­cu­la­tions. No­mura Hold­ings Inc, Daiwa Se­cu­ri­ties Group Inc and Gold­man Sachs Group Inc are among the 61 firms work­ing on the 1.3 tril­lion-yen deal, the biggest sin­gle eq­uity of­fer­ing in Ja­pan since 1999.

With about three-quar­ters of the sale fo­cused on house­holds, bro­ker­ages face the costly task of tar­get­ing a large num­ber of in­vestors across Ja­pan at a time of lin­ger­ing mar­ket jit­ters over North Korea. Prospects for the postal and fi­nan­cial-ser­vices gi­ant, whose shares have barely risen since list­ing al­most two years ago, are clouded by shrink­ing mail vol­umes and low in­ter­est rates.

Fi­nance Min­istry of­fi­cials de­clined to com­ment on the fees, as did rep­re­sen­ta­tives from No­mura, Daiwa and Gold­man Sachs, which are joint global co­or­di­na­tors of the deal. No­mura and Daiwa will man­age the bulk of the of­fer­ing, fol­lowed by Gold­man Sachs, Mit­subishi UFJ Mor­gan Stan­ley Se­cu­ri­ties Co, Mizuho Se­cu­ri­ties Co and SMBC Nikko Se­cu­ri­ties Inc, sources said ear­lier this week.

Bro­ker­ages in Ja­pan tend to ac­cept lower fees for un­der­writ­ing govern­ment share sales be­cause of the pres­tige at­tached to the trans­ac­tions. With the Ja­pan Post of­fer­ing, they are count­ing on pen­e­trat­ing ru­ral ar­eas to ob­tain new ac­counts from peo­ple who wish to in­vest more of their sav­ings.

Un­der­scor­ing the need to tar­get a wide range of in­vestors, in­clud­ing in ru­ral Ja­pan, un­der­writ­ers started broad­cast­ing television ad­ver­tise­ments this week fea­tur­ing a girl walk­ing with a goat in the coun­try­side. The road show will take in pro­vin­cial cities such as Sendai and Ku­mamoto.

Nev­er­the­less, the fees are lower than those paid to man­agers of Ja­pan Post’s three-pronged ini­tial pub­lic of­fer­ing with its bank­ing and in­sur­ance units in 2015. Un­der­writ­ers of the 1.4 tril­lion-yen IPO re­ceived about 1.6%, Bloomberg cal­cu­lated based on in­for­ma­tion from peo­ple with knowl­edge of the mat­ter at the time.

The govern­ment is di­vest­ing its own­er­ship in Ja­pan Post to raise funds for ar­eas dev­as­tated by the 2011 earth­quake and tsunami in north­ern Ja­pan. Shares of the hold­ing com­pany have risen less than 1% since the list­ing in Novem­ber 2015.

The min­istry re­duced its stake in Ja­pan To­bacco from half to a third in 2013, also for quake re­lief. More than 40% of that of­fer­ing was aimed at in­ter­na­tional in­sti­tu­tional in­vestors, ac­cord­ing to data com­piled by Bloomberg. — Bloomberg

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