Japan govt. to raise around US $ 3.8bn via JR Kyushu IPO

The Japanese government will raise around US $ 3.8 billion through the privatisation of Kyushu Railway Co in the country’s biggest initial public offering (IPO) this year, a regulatory filing by the railway operator yesterday showed.

Kyushu Railway, better known as JR Kyushu, has received approval to list on the Tokyo Stock Exchange on October 25, according to the filing with the Finance Ministry.

The government will sell its entire stake of 160 million shares, while no new shares will be offered in the IPO. At the indicative price of 2,450 yen per share, the government would sell 392 billion yen (US $ 3.8 billion) of stock.

The company will determine the final IPO price on October 17 after gauging demand from investors.

It will be Japan’s biggest IPO this year, exceeding the US $ 1.3 billion raised in its July IPO by messaging app firm Line Corp.

The IPO of the rail company, which operates in the southern island of Kyushu, is part of the breakup and privatisation efforts of Japan’s massive state-owned railway network dating back to the 1980s.

Among the companies created from the split, the three profitable ones in the main island covering major cities such as Tokyo and Osaka made their IPOS in the 1990s.

JR Kyushu, serving a less populated area, has found it difficult to terminate unprofitable services due to potential political backlash.

But Kyushu has been able to turn itself into a profitable company by building up a successful real estate business that includes redeveloping station buildings to attract commercial tenants.

Nomura Securities, Mitsubishi UFJ Morgan Stanley Securities and JP Morgan Securities are joint global coordinators for the Kyushu IPO.

It follows the US $ 12 billion triple IPO of state-owned Japan Post Holdings and its two financial units in November last year.