The SoftBank Group’s proposed $18 billion (2 trillion yen) IPO would mark it as one of the biggest listings by a Japanese company.
On Monday, the SoftBank Group Corp disclosed, it is considering an IPO for its Japanese wireless business and is seeking to raise $18 billion through this move.
The strategic move of spinning-off its Japanese wireless business has the potential to transform it into one of the world’s biggest tech investors as well as provide it with more autonomy.
Japan’s Nikkei newspaper reported citing sources as saying the SoftBank Group plans on selling nearly 30% of its holding in SoftBank Corp and raise $18 billion (2 trillion yen) in the process which would then be funneled towards investments for growth, which includes the acquisition of foreign IT companies.
The Nikkei also reported that the SoftBank Group plans on getting approval for the IPO from the Tokyo Stock Exchange by early spring; it also wants to tap overseas markets, possibly London, around autumn, for the same.
In a statement, the SoftBank Group said, a listing of the business was one option for its capital strategy however no such decision has been made, yet.
“It makes sense to spin off the mobile-phone business using a public offering that would leave SoftBank in control and provide SoftBank with more cash to pursue its strategy of investing in companies with potentially high growth prospects,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business. “It is a way of obtaining capital without adding debt or diluting SoftBank’s equity interests in the growth companies.”
The SoftBank Group’s domestic telecoms unit, which is Japan’s No. 3 wireless carrier, posted a rise of 4.5% in operating profit to 720 billion yen in the year ended March on sales of 3.2 trillion yen.
The Group’s complicated structure and its constant stream of new investments have left many investors struggling to value the company; analysts have also often noted that its market value does not accurately reflect the value of its massive holdings.
While its current market value stands at a modest $92 billion, its near 30% stake in Alibaba however is worth nearly $140 billion.
Although big companies wanting to list themselves in Tokyo are required to float at least 35% of their shares, the rules can be relaxed provided the company also lists its shares overseas.