Telecoms giant SoftBank unveils massive $21 bn IPO of Japan mobile unit

One risk for the IPO is a damaging price war among Japan's mobile operators

SoftBank Group will sell a total of 1.60 billion shares or 33.5 percent of the unit, including 1.43 billion shares in Japan and 176 million shares overseas, with an option to offer an additional 160 million shares in case of exceptional demand.

"I would like to use the money raised through the IPO for additional investments in the Vison Fund and to pay back debt", SoftBank Group's Chief Executive Officer Masayoshi Son said at a press conference last week, referring to its almost $100 billion Saudi-backed fund. SoftBank's bets so far have been as varied as small gaming startups, ride-hailing firms such as Uber Technologies, and e-commerce behemoth Alibaba Group Holding.

At a price of 1,500 yen per share, the planned IPO would value SoftBank's mobile division at 7.2 trillion yen, or $63 billion.

The parent group's founder and chief executive, Masayoshi Son, has said the IPO proceeds will also enable SoftBank to pay down debt and provide a supply of cash for further investment.

On sale is 1.6 billion SoftBank Corp shares at a tentative price of CNY 1,500 (roughly Rs. 15,700) each, raising CNY 2.4 trillion.

But the massive offering comes at a time when the wireless unit faces potential pricing pressure.

Son said at the press conference that the mobile company, Japan's third-largest wireless carrier by subscribers, is considering lowering charges after similar plans unveiled by its two bigger rivals NTT Docomo Inc. and KDDI Corp.

Japanese households are commonly seen as an attractive target in IPOs with their 1,829 trillion yen in financial assets, even if they are traditionally risk-averse with over 50 percent of assets in cash and deposits.

"I think a reasonable amount of money will be attracted to this one", said Tetsutaro Abe, an equity research analyst at Aizawa Securities.

Founded in 1986, initially running software, broadband and fixed-line telecommunications businesses, the company has expanded to become one of Japan's top mobile service providers.

SoftBank Corp forecasts net profit to grow 4.8 percent to 420 billion yen in the business year through March 2019.

Last year, it launched a $100 billion investment vehicle called the SoftBank Vision Fund, which has secured the backing of some of the world's biggest technology companies as well as sovereign wealth funds in the Middle East.

Investors have grown nervous about the lack of clarity in some of the investments by the $90 billion Vision Fund.

Its shares closed mostly flat on Monday at ¥8,777, down more than 20% since the killing in early October.

US credit-rating firm S&P Global Ratings said the IPO was credit positive for the parent, saying it expects a bulk of the proceeds to be used to repay debt. SoftBank has picked Nomura Holdings Inc., Goldman Sachs Group Inc., Deutsche Bank AG, Mizuho Financial Group Inc., JPMorgan Chase & Co. and Sumitomo Mitsui Financial Group Inc. among joint global coordinators.

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