Japan-based SoftBank Group filed for an Initial Public Offering (IPO) for its domestic telecoms business worth 2.4 trillion yen (approximately $21.16 billion) set to drop next month. This is the second highest IPO ever, ranking behind the Alibaba Group, which holds the record for largest IPO at $25 billion.
SoftBank founder Masayoshi Son has set one price and one price only, of 1,500 Yen per share. Son and his bankers are betting that they’ll be able to sell all of the shares in the initial public offering of their cash-cow business, which currently has around 34 million mobile subscribers and stretches across wireless, broadband and fixed-line services. Son is among the biggest investors in the tech space. Last year, he created a $100 billion Vision Fund to invest in the fast-growing AI and e-commerce industries.
If the IPO is laid up at the 1,500 yen share price, SoftBank’s domestic telecoms business would have a total market value of around 7.2 trillion yen, making it one of Japan’s top 10 listed companies.
Based on SoftBank’s net income in the last fiscal year, investors who buy at the anticipated IPO price should get a dividend yield of almost 5%, which is a very lucrative deal, given that Japan is, according to Bloomberg, “the land of negative interest rates.” That said, Japan’s government is increasing its pressure on carriers to lower rates. If that happens, SoftBank’s profit could nosedive and jeopardize this very pull factor.
SoftBank plans to use the proceeds from the IPO to pay down debt and contribute to the growth of SoftBank Founder, CEO and top shareholder Masayoshi Son’s Vision Fund, which plans to invest hundreds of billions of dollars in start-ups from emerging technology areas.
The final price for the IPO will be set on Monday, and the new shares will begin trading the following Wednesday.