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Mitsui Fudosan plans big share issue on Olympics

Bloomberg

Mitsui Fudosan Co. plans to raise as much as ¥324.6 billion in the biggest share sale by a property company in Japan in at least four decades.

The proceeds will be used for real estate development, as the company sees opportunities ahead of the planned Tokyo Olympics in 2020, Mitsui Fudosan said Tuesday in a filing with the Finance Ministry.

It will sell up to 110 million shares, Japan’s biggest real estate developer said in a separate release through the stock exchange.

Real estate investment has picked up since Prime Minister Shinzo Abe pledged to end 15 years of deflation and the Bank of Japan embarked on unprecedented monetary easing. Mitsui Fudosan’s business environment has changed “dramatically” since it issued its mid-term plan in 2012 as the economy recovers, the Tokyo-based company said in the statement.

“This is an exciting time for Japanese real estate,” said Tim Gibson, head of Asia property equities at Henderson Global Investors Ltd. “They clearly believe in the recovery of Japan, that it’s not just temporary, but sustainable.”

“The shares went up sharply over the last two years and now are fairly valued,” said Yoji Otani, an analyst at Deutsche Bank AG in Tokyo. “It’s a sensible time to sell shares.”

The fundraising will be the largest among Japanese real estate companies in at least 43 years, data showed. The last time Mitsui Fudosan sold shares to the public was in 1982, when it issued ¥12 billion worth of securities, spokesman Mitsutoshi Tenda said.

As much as $3.2 billion of new shares issued would account for about 10 percent of Mitsui Fudosan’s current market value, data show.

The stock “may nosedive” immediately after the announcement, Otani said, citing concerns of dilution. He added that it would eventually stabilize.

The sale in Japan will be managed by Daiwa Securities Group Inc., Nomura Securities Co. and SMBC Nikko Securities Inc.