SoftBank Group weighs the largest public listing

the mobile business is doing much better than feared, though performance may be dressed up, ahead of October’s anticipated IPO

Pelham Smithers

london — SoftBank Group is considering seeking a valuation of about $90 billion for its Japanese wireless business in a planned initial public offering, people familiar with the matter said. The shares rose the most in two months.

SoftBank is speaking to advisers about selling a third — or about $30 billion — of the business in the IPO, the people said, asking not to be identified as the talks aren’t public. Discussions are preliminary and the final valuation will depend on investors’ feedback, they said. SoftBank rose 6.5 per cent in Tokyo, the biggest increase since June 9.

A representative for SoftBank declined to comment.

A $30 billion-IPO would make SoftBank Mobile the largest listing ever. Alibaba Group Holding Ltd. made its market debut in 2014 with a $25 billion offering, the biggest so far. SoftBank is seeking a higher price-to-earnings premium for its wireless business than its closest publicly traded peers, NTT Docomo Inc and KDDI Corp, the people said. Shareholders believe the cash-rich company’s guaranteed dividend yield as well as its technology partnerships and the benefits of being linked to the parent firm, may help achieve that higher valuation, they said. NTT Docomo ended Monday with a market value of almost $100 billion, while KDDI was at about $70 billion. The SoftBank unit could be listed in Tokyo as early as the fourth quarter, the people said.

SoftBank founder Masayoshi Son said in his investor presentation on Monday that he’s working toward a listing on the Tokyo Stock Exchange. The division’s free cash flow more than doubled to ¥154 billion ($1.4 billion) in the three months ended June.

“On the positive side, there’s the impressive performance of the Vision Fund’s investments, a performance which essentially showcases Son’s deal-making capabilities,” Pelham Smithers, whose London-based firm offers equity research on Asian technology companies, wrote in a note to clients.

“The mobile business is doing much better than feared, though performance may be dressed up, ahead of October’s anticipated IPO.”