Goldman Sachs Group Inc. (GS:US), the third-largest manager of Japanese equity offerings this year, is urging companies to sell shares and meet renewed investor demand for the nation’s stocks under Prime Minister Shinzo Abe.
Makoto Ito, co-head of the bank’s financing group in Tokyo, plans to visit senior executives at more than 15 Japanese firms this week to propose that they consider raising funds, he said in an interview on July 1. Ito met global investors last week in Hong Kong and Singapore who manage more than 100 trillion yen ($1 trillion) in assets, he said, declining to name any of the companies or investors.
Dentsu Inc. (4324) and Suntory Beverage & Food Ltd. (2587) are among Japanese companies that are funding expansion abroad by issuing shares. The nation’s equity offerings more than quadrupled to 2.7 trillion yen in the first half of 2013, data compiled by Bloomberg show. Ito, who was pessimistic on the market after stocks plunged since May, now says second-half sales will top the 1.5 trillion yen raised in the same period last year.
“Global investors still have the appetite and a constructive view of Japan even under turbulent and uncertain circumstances,” Ito said after meeting with U.S. and Asian sovereign funds, hedge funds and asset managers on June 27 and 28. “Japanese firms are becoming more decisive to raise funds for investment and acquisitions for growth.”
The Nikkei 225 Stock Average (NKY) sank as much as 20 percent from a five-year high on May 22, closing yesterday 10 percent lower than the peak. Even after the drop, Japan has outperformed all major equity markets this year on optimism Abe’s three-pronged strategy of fiscal stimulus, monetary easing and structural reforms will beat deflation and boost growth. The stock average fell 0.2 percent as of 2:31 p.m. in Tokyo.
Goldman Sachs, which employs about 100 investment bankers in Tokyo, has managed seven global equity deals in Japan this year, including Japan Tobacco Inc. (2914)’s $7.5 billion share sale, according to data compiled by Bloomberg. It also worked on Suntory Beverage’s initial public offering, valued at about $4 billion. The New York-based bank held a 16 percent share of the Japanese market, the most in more than a decade, the data show.
Nomura Holdings Inc. (8604), Japan’s largest brokerage, was ranked No. 1 manager of equity sales in the country in the first half of 2013, the data show. Daiwa Securities Group Inc. was second.
Dentsu, the Japanese advertising company that bought London-based Aegis Group Plc, said yesterday it will raise as much as 120.1 billion yen in a public share sale to help pay for the deal.
In the second half of last year, Japan Airlines Corp. (9201), ANA Holdings Inc. (9202) and Sony Corp. were among 81 Japanese companies that sold equity-related securities.
Japanese markets have rallied on the back of unprecedented monetary easing by the central bank and Abe’s $105 billion in fiscal stimulus aimed at reversing 15 years of deflationary malaise. The measures have also weakened the yen, improving the earnings outlook for the country’s exporters.
AMP Capital Investors Ltd. (AMP), a unit of Australia’s biggest asset manager, resumed buying Japanese stocks in anticipation of Abe successfully pushing through his reforms, Nader Naeimi, the firm’s head of dynamic asset allocation, said in an interview. He forecasts equities in the country will rally as much as 20 percent by year’s end, and that the yen will slide to 110 against the dollar.
Signs that Japan’s economy is picking up is bolstering sentiment among executives as well as investors, according to Ito, who is head of equity capital markets in Tokyo. Confidence (JNTSMFG) among large manufacturers climbed to a two-year high in June, the Bank of Japan’s quarterly Tankan survey showed this week.
Reports last week showed industrial production rose the most since 2011 in May, retail sales climbed and consumer prices halted a six-month slide.
“The equity capital markets will become active once we’re able to ride this jet stream,” Ito said.
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