SoftBank Steps Closer to Transformation With $21-Billion Mobile IPO

SoftBank CEO Masa Son

SoftBank CEO Masa Son

SoftBank Group Corp has won approval to conduct a 2.4 trillion yen ($21.04 billion) initial public offering (IPO) of its Japanese telecoms business, in a deal that will seal the group's transformation into a top global technology investor. SoftBank Chief Executive Masayoshi Son has used the company's $100bn Vision Fund to invest in companies in sectors from gaming to ride-hailing, farming and chip design. The fund has made big investments in dozens of startups such as WeWork and Slack.

Mr Son had previously said he was aiming for a higher dividend to provide cash for what has become his main occupation.

The final IPO price will be determined on December 10, and SoftBank will list on the Tokyo Stock Exchange on December 19 with an initial market value of ¥7.18-trillion - about ¥1-trillion above that of rival KDDI, which has about 10-million more subscribers.

SoftBank hopes to lure investors with a dividend payout ratio of about 85 percent of net income. "Rakuten's entry will also increase competition", said Takashi Nakamura, senior strategist at Tokai Tokyo Research Institute.

"That provides an incentive" for investors at the IPO, he said. His $100 billion Vision Fund is the largest technology investment fund ever, and he has said he plans to establish similar sized funds every two to three years.

Even after the listing, the parent owns 63 percent of Softbank Group. That figure could change as the range of the offering is set.

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SoftBank plans to offer 89 percent of the shares on sale to domestic investors, almost all of which will be targeted at retail investors, people familiar with the matter have told Reuters. 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.

A journalist raises her hand to ask a question to Japan's SoftBank Group Corp Chief Executive Masayoshi Son during a news conference in Tokyo, Japan, November 5, 2018.

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

Earlier this month, Son condemned the killing but said he would continue to do business with Saudi Arabia. SoftBank will maintain at least 60% ownership of the domestic telecom business.

Softbank's IPO will help raise funds for the company as it transforms from a telecoms giant into an investment firm.

The total size of offering could rise by 240.6 billion yen if an overallotment is exercised, taking the total fundraising closer to the $25 billion that Alibaba Group Holding Ltd raised in 2014 in the world's biggest-ever IPO.

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