JAL reportedly gets all IPO orders

Bloomberg

Japan Airlines Co.’s ¥663 billion initial public offering, the largest since Facebook Inc., has drawn orders for all the stock being sold, according to two sources with knowledge of the transaction.

The government-backed Enterprise Turnaround Initiative Corp. is offering 175 million shares for ¥3,500 to ¥3,790 apiece.

International investors, which will be allocated about 25 percent of the IPO shares, have already put in orders for about twice that amount, said one source, who declined to be identified because the information is private. The other 75 percent, set to be sold to Japanese institutional and retail investors, is also covered, the source said.

JAL is returning to the stock market after a two-year government-backed turnaround that shed a third of its workforce, scrapped routes, retired older, less fuel-efficient planes and transformed it into the world’s most profitable airline.

The ¥3,790 price is about five times forecast earnings, compared with 15 times for All Nippon Airways Co.

“It’s reasonably priced so it’s popular,” said Senri Sasahara, chief executive officer of Innovative Advisor Corp., which provides advice on mergers and acquisitions. “The brokers seem to be getting reasonable requests from buyers.”

Sasahara was approached Wednesday for the first time by a broker trying to sell JAL shares, while he typically gets “lots of” calls from securities companies wanting to market a single company’s stock, he said.

JAL spokeswoman Sze Hunn Yap said she had no knowledge of the sale’s demand.

The final price for the IPO, Japan’s second-biggest in more than a decade, will be decided Monday, according to a company statement in August. The shares will start trading on Sept. 19.

The turnaround was supported by a ¥350 billion investment from EITC. The fund, which can only invest in companies for three years, is selling its 97 percent stake in the IPO.

Companies have raised more than ¥130 billion in 24 IPOs priced in Japan this year, led by Activia Properties Inc.’s ¥94 billion sale in May. That is little different from a year earlier, according to Bloomberg data. Facebook raised $16 billion in its New York IPO in May. The shares have since fallen more than 50 percent from the sale price.

JAL’s share offering will be the largest in Japan since Dai-ichi Life Insurance Co. raised ¥1 trillion in March 2010. That was Japan’s biggest since 1998, when NTT DoCoMo Inc. raised ¥2.1 trillion.