SoftBank unveils massive $21bn IPO of Japan mobile unit

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SoftBank Group is seeking to raise 2.4 trillion yen (S$29 billion) in the initial public offering (IPO) of its Japanese telecoms operations next month, raising more capital to fuel investments for its US$100 billion (S$138 billion) Vision Fund.

The parent is investing in a range of companies globally, including USA wireless company Sprint, British IoT company ARM, Chinese e-commerce giant Alibaba and US ride-sharing service Uber. The fund has been investing in various companies, solar projects and artificial intelligence.

The final IPO price will be determined on December 10, and SoftBank Corp will list on the Tokyo Stock Exchange on December 19 with an initial market value of 7.18 trillion yen - about 1 trillion yen above that of rival KDDI Corp (9433.T), which has about 10 million more subscribers. In that case, the total would come close to the $25 billion (roughly Rs. 1,82,637 crores) worth of shares sold by Alibaba in 2014 in the biggest-ever IPO. Japanese households are commonly seen as an attractive target in IPOs with their 1,829 trillion yen in financial assets, even if they are traditionally risk-averse with over 50 percent of assets in cash and deposits.

Softbank is targeting a dividend payout ratio of about 85 percent of net income, according to the filing. Based on net income in the last fiscal year, that would work out to an nearly 5 percent yield at the indicated IPO price.

Banking industry sources have said SoftBank's wide brand recognition should also prove popular with individual investors, including those new to stocks. SoftBank's bets so far have been as varied as small gaming start-ups, ride-hailing firms such as Uber Technologies, and e-commerce behemoth Alibaba Group Holding.

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After the public listing, SoftBank Group, the parent, will hold about 63 per cent of the wireless unit. The price of the listing will be set on December 10. SoftBank has picked Nomura Holdings Inc., Goldman Sachs Group Inc., Deutsche Bank AG, Mizuho Financial Group Inc., JPMorgan Chase & Co. and Sumitomo Mitsui Financial Group Inc. among joint global coordinators.

SoftBank forecasts that the domestic telecoms operations, which include wireless, broadband and fixed-line services, will post 700 billion yen in annual operating profit.

A journalist raises her hand to ask a question to Japan's SoftBank Group Corp Chief Executive Masayoshi Son during a news conference in Tokyo, Japan, November 5, 2018. Docomo earlier this month said it plans to "return" 400 billion yen to customers, while KDDI said it won't follow along because it already introduced lower rates.

The IPO will mark the transformation of the parent from a mobile phone network provider - which successfully challenged Japan's incumbent duopoly - into one of the world's biggest technology investors under Chief Executive Masayoshi Son. SoftBank will still own at least 60% of the business following the listing.

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