The final phase of government plans to privatize the nation’s postal services got off to a good start Wednesday as shares in three newly private companies soared above their offering prices they went live.
In the first phase of a planned three-stage release of shares in Japan Post Holding Co. and its banking and insurance units, shares in the holding company fetched an initial quotation of ¥1,631, up a brisk 17 percent from the initial offering price of ¥1,400. Japan Post Bank Co. and Japan Post Insurance Co. shares were initially quoted at ¥1,680 and ¥2,929, respectively 16 percent and 33 percent higher than their sticker prices.
The initial quotations place the combined market capitalization of the three companies at over ¥16 trillion, making this the second-largest IPO of a former public corporation after Nippon Telegraph and Telephone Corp., which reached ¥25 trillion at its February 1987 listing.
Although the three remain partially publicly held, Taizo Nishimuro, president and CEO of the holding company, said the conversion of the three firms into private-sector players will “contribute to invigorating the nation’s economy.”
“I think we need to implement measures to have our post office staff, who form the foundation of our post office network, strive to improve profits,” he told a news conference following the listing ceremony at the Tokyo Stock Exchange.
Also Wednesday, Chief Cabinet Secretary Yoshihide Suga said the shares’ brisk performance showed the public had “a positive view” of the three companies.
In the end, the holding company’s shares closed the day at ¥1,760, up 26 percent from the offering, while the banking and insurance units ended up 15 percent and 56 percent, at ¥1,671 and ¥3,430, respectively.
The surge was so strong the shares of Japan Post Insurance triggered the stock exchange’s circuit-breaker in afternoon trade, which aims to limit price fluctuations on any one day.
The favorable investor response was to be expected as the company continues to receive government backing, said Keio University professor Hideki Ide.
“It’s hard to imagine the shares will decline significantly, either,” Ide said. “The holding company will continue to hold 50 percent in the (banking and insurance) units, and that will ensure (the ailing mail delivery unit) Japan Post Co. will get sufficient support (from the two other subsidiaries).” Japan Post Co. remains 100 percent owned by the holding company.
But he added: “Japan Post Co. will need to show viable strategies to take advantage of its real estate assets and expand overseas logistics operations.”
The listing brings the former public corporations face to face with shareholders, to whom they are required to show paths to growth, even as they remain tied to legal obligations such as operating post offices — their retail outlets — even in remote areas and upholding a deposit cap of ¥10 million in their banking business.
The government hopes investors will continue to value the shares highly as it plans to release more by fiscal 2022 in a bid to raise a total of ¥4 trillion for reconstruction in areas devastated by the March 2011 earthquake and tsunami.
The success of the IPOs is some relief for the government, which is haunted by the listing of the NTT shares. The initial batch of shares in the former communications public corporation, released at the height of the asset-inflated economic bubble in Japan, attracted significant investor interest, and in two months shares nearly tripled in price to ¥3.18 million each from the initial offering price of ¥1.197 million. But the shares declined thereafter, making it difficult for the government to release the rest of its holdings.
The closely watched IPO of three postal companies, collectively representing the nation’s biggest this year, marks the start of the final stage of a privatization policy initiated by Prime Minister Junichiro Koizumi in 2005, when he put it on the agenda as he dissolved the Lower House for a snap election — a bet he won as the ruling coalition secured a majority.
Under the plans, the government will continue to sell its portion in Japan Post Holdings until its remaining stake is diluted to a little more than one-third. The holding company plans to sell its stakes in the two units until only half of each remains.
The government hopes the offerings of the shares, many of them sold to retail investors, will also encourage households to shift financial assets largely dormant in bank deposits to stocks, contributing to economic growth.
In his statement posted on the holding company’s website, Nishimuro said the listing was aimed at raising the group’s independence and freeing up its management while it remains partially under government control.
“The listing of the shares is not our goal,” the statement said. “As a listed company, we will work on management reforms early, and continue to make group-wide efforts to provide products and services through our nationwide network of post offices.”
Information from Kyodo added