SoftBank shares sank 15% on debut, wiping off $9B, as sell-offs spiked after its record IPO on worries about a service outage and exposure to Huawei.
tokyo — SoftBank shares sank 15 percent on debut, wiping $9 billion off their value, as investors sold off the telecoms operator after its record IPO on worries about a recent service outage and its exposure to China’s Huawei.
The poor start for the unit of tech investment giant SoftBank Group meant that for Japan’s mom-andpop investors concerns about the company and the nation’s telecoms market trumped the appeal of the group’s charismatic founder Masayoshi Son.
Such a debut is uncommon in the Japanese IPO market. Of 82 IPOs so far this year, SoftBank’s $23.5 billion float was only the seventh to open below the offering price. Among recent major IPOs, Japan Display was the only one to flop, suffering a fall in its 2014 debut.
“There was a disruption in its network early this month as well as Huawei’s issues. There hasn’t been good news involving SoftBank recently,” said Tetsuro Ii, chief executive officer at Commons Asset Management.
Shares of SoftBank closed at ¥1,282, 14.5 per cent lower than its IPO price of ¥1,500 and giving the telco a market cap of about ¥6.1 trillion — about ¥1.1 trillion below its value at the time of the IPO. Shares opened trading at ¥1,463.
“It was beyond our expectations that the shares would fall that much,” said a senior executive at one of SoftBank’s domestic lead underwriters, declining to be named since he was not authorised to discuss the matter with the media.
SoftBank shares were the most heavily traded on the Tokyo Stock Exchange’s first section, as amid heightened risk aversion the benchmark Nikkei 225 index fell to a nine-month low, closing down 0.6 per cent. SoftBank Group lost 0.9 per cent.
The IPO was Japan’s biggest ever and just shy of the world record $25 billion 2014 listing of Chinese ecommerce giant Alibaba Group Holding, a SoftBank Group portfolio company. SoftBank Group raised ¥2.65 trillion in the IPO. —