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SoftBank Will Forego IPO Price Range For Next Month's Offering
SoftBank has set an indicative share price of 1,500 yen for the initial public offering of its domestic telecom unit, becoming the first company in Japan to forego an IPO, as Reuters reports.
That indicative share price could make the public offering worth 2.4 trillion yen ($21.16 billion), which would be one of the largest IPOs ever. Alibaba Group currently holds the largest ever IPO, raising $25 billion in 2014, as TechCrunch notes.
The price “seems consistent with what we’re hearing about relatively strong retail demand,” said analyst Chris Lane at Sanford C. Bernstein. “We’re not surprised about that demand as the retail investor is really looking at the yield.”
SoftBank is set to have an annual dividend yield – or dividend as a percentage of share price – of 5 percent, Reuters calculations showed. That compared with 4.18 percent of mobile market leader NTT DoCoMo Inc.
“If effectively you’re confident that the IPO will be oversubscribed at that price, then there’s no need to set a price range,” Lane said.
SoftBank announced in November that it’s seeking to raise $23 billion through the IPO of its Japanese mobile unit, which has been approved by the Tokyo Stock Exchange for a listing on Dec. 19. The IPO will offer up to about 37% of the mobile unit, known as SoftBank Corp.
The Wall Street Journal reported that SoftBank could be positioning itself to pay off its swelling debt with money raised through the IPO. The company’s debt was nearly ¥18 trillion as of Sept. 30, compared with ¥3.2 trillion in cash and cash equivalents, according to the Journal.
SoftBank Chief Executive Masayoshi Son will no doubt also want to funnel some money into the company’s $100 billion Vision Fund, which has made massive bets on the tech sector in recent years. Among the 22 startups the Vision Fund has invested in include Uber, Magic Leap and WeWork.
The Financial Times pointed out two years ago that the Vision Fund is roughly the same size “as all funds raised by US venture capital firms over the last two and a half years.”
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