Bloomberg News

Japan Post to Choose Adviser for Global IPO ‘Shortly’

November 14, 2012

Japan Post Holdings Co., the country’s biggest deposit holder, said it will soon select an adviser for its initial public offering, a deal that may exceed 4 trillion yen ($50 billion).

The adviser will help state-owned Japan Post find ways to boost internal controls, profitability and new businesses before the share sale, said Yuuki Takemura, group leader for the company’s IPO Preparatory Office.

“Several banks and brokerages, mainly local firms, are visiting us now,” Takemura said in an interview on Nov. 12, declining to name the companies. Japan Post will choose an adviser “shortly” after reviewing presentations, he said.

Local and overseas brokerages are expected to vie for what could be Japan’s largest state asset sale, exceeding Nippon Telegraph & Telephone Corp. (9432) in 1987. Advising on the deal could boost the winning firm’s chances of underwriting the offering, which the government plans to complete by October 2015.

“It will be a huge IPO and banks worldwide will want to get involved,” said Kazumi Tanaka, an IPO analyst at T&C Financial Research Inc. in Tokyo. “Given the the big fees that are likely to come with this deal, competition for the mandate will be hot.”

Takemura declined to name the firms or give a timeline for the selection process. Tokyo-based Japan Post doesn’t plan to make a public request for advisory proposals, he said.

Bank Opposition

Japan Post formed the IPO Preparatory Office on Nov. 1, consisting of eight members, including Takemura, as part of Prime Minister Yoshihiko Noda’s privatization plan. Noda has said proceeds from the sale would help pay for rebuilding following last year’s record earthquake and tsunami.

Lending unit Japan Post Bank Co. in September applied to begin selling mortgages next April. Banks including Mitsubishi UFJ Financial Group Inc. (8306), the country’s largest lender, oppose the move, saying it’s unfair for a state-backed bank to join the market before a level playing field is created.

Japan Post won’t exclude lenders from the adviser selection process and will judge proposals fairly, Takemura said.

Nomura Holdings Inc. (8604) is Japan’s top equity underwriter this year, according to data compiled by Bloomberg. Sumitomo Mitsui Financial Group Inc. (8316), the country’s second-biggest bank, is No. 2, followed by Mitsubishi UFJ, Daiwa Securities Group Inc. (8601) and Mizuho Financial Group Inc. (8411), Japan’s third-largest lender.

The offering will probably take place in phases because of its size, which may exceed $50 billion, Postal Reform Minister Mikio Shimoji said last month. The Ministry of Finance owns the company and is required to retain at least a third.

The company boosted profit 2.7 percent to 236.9 billion yen in the six months ended Sept. 30, compared with a year earlier, it said in a statement today. Net assets increased to 11.2 trillion yen.

Japan post got 75 percent of revenue from its life insurance business, 14 percent from banking and 10 percent from postal services, in the fiscal first half.

To contact the reporters on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net


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