SoftBank unveils $21 billion IPO of Japan mobile business

SoftBank CEO Masa Son

SoftBank Group, the Japanese multinational conglomerate with stakes in some of the hottest USA tech start-ups, is planning a massive IPO for its telecom arm that could become Japan's largest public offering to date, Bloomberg reported Monday.

"I would like to use the money raised through the IPO for additional investments in the Vison Fund and to pay back debt", SoftBank Group's Chief Executive Officer Masayoshi Son said at a press conference last week, referring to its almost $100 billion Saudi-backed fund. It already has invested in Uber, WeWork and Slack, among other companies.

The Japanese technology giant yesterday said in a prospectus that it would sell 1.6 billion shares at ¥1,500 apiece in a new entity called Softbank Corp, which is to start trading in Tokyo on December 19.

SoftBank Group will sell a total of 1.60 billion shares or 33.5 percent of the unit, including 1.43 billion shares in Japan and 176 million shares overseas, with an option to offer an additional 160 million shares in case of exceptional demand.

"The dividend payout ratio is very high", said Masahiko Ishino, an analyst at Tokai Tokyo Research Center.

"That provides an incentive" for investors at the IPO, he said.

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The telecommunications and investment giant is shifting its focus to investment in global tech startups such as semiconductor designer ARM Holdings and graphics chipmaker Nvidia Corp. through the Vision Fund.

At the indicated price, the business is being valued at ¥7.18 trillion.

After the public listing, Softbank Group, the parent, is to hold about 63 percent of the wireless unit. That figure could change as the range of the offering is set. SoftBank has picked Nomura Holdings Inc., Goldman Sachs Group Inc., Deutsche Bank AG, Mizuho Financial Group Inc., JPMorgan Securities and Sumitomo Mitsui Financial Group Inc. among joint global coordinators. SoftBank is targeting individuals and will sell the biggest part of the shares to retail investors, people familiar with the matter said earlier this month.

Softbank has forecast that the domestic telecoms operations, which include wireless, broadband and fixed-line services, would post ¥700 billion in annual operating profit.

Son in June argued that even without the domestic telecoms business, SoftBank shares should be worth over ¥14,000 - nearly 40% over their current price - considering the value of its investments in Alibaba, Arm Holdings, Sprint and Yahoo Japan, as well as Vision Fund. The deal would represent the world's biggest market debut since Alibaba Group (BABA) raised $25 billion for its IPO in NY in 2014.

SoftBank hopes that putting a value on the telecoms business will help bolster its own share price, which it sees as undervalued.

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