SoftBank Group announced this week that it was considering listing its Japanese wireless business to raise $18 billion, which would help accelerate the conglomerate’s transformation into one of the world’s biggest tech investors.
Without citing sources, the Nikkei newspaper said that the company is aiming to sell about 30% of SoftBank Corp, Japan’s number three wireless carrier, for around 2 trillion yen, which translates to about $18 billion. The paper added that proceeds will go towards investments in growth, such as buying foreign information technology companies.
“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. It is a way of obtaining capital without adding debt or diluting SoftBank’s equity interests in the growth companies,” Erik Gordon, a professor at the University of Michigan’s Ross School of Business.
SoftBank Group plans to seek approval from the Tokyo Stock Exchange as early as spring, the Nikkei said.
An initial public offering amounting to about 2 trillion yen would be one of the biggest offerings by a Japanese company, rivaling a 2.1 trillion yen listing by NTT DoCoMo, Inc. in 1998, and the 2.2 trillion yen raised by the Government’s sale of Nippon Telegraph and Telephone Corp shares before its 1987 listing.
“The listing of its domestic mobile unit has been one of the key moves we have been anticipating for the firm to raise cash and lower its debt levels,” Amir Anvarzadeh, head of Japanese equity sales at BGC Partners Inc. in Singapore, wrote in a note.
“Given that you have to apply a massive conglomerate discount to come to a fair value for SoftBank, the implication is that this news should send SoftBank shares substantially higher,” said Pelham Smithers, whose London-based firm offers equity research on Asian technology companies, in a note to clients. “It means that SoftBank appears willing to treat operating assets, like investment assets, as tradable commodities.”
“The listing of its domestic mobile unit has been one of the key moves we have been anticipating for the firm to raise cash and lower its debt levels,” Amir Anvarzadeh, head of Japanese equity sales at BGC Partners Inc. in Singapore, wrote in a note.
