Dai-ichi Life Insurance Co. debuted Thursday on the Tokyo Stock Exchange’s first section with an opening price of ¥160,000 per share, sharply higher than its initial public offering price of ¥140,000.
Japan’s second-largest life insurer, formerly a mutually owned company, is valued at ¥1.6 trillion based on the opening price, making it the largest listing in terms of capitalization since NTT DoCoMo Inc.’s 1998 debut at ¥7.4 trillion.
Given the giant scale of the IPO, the TSE took the extraordinary step of only accepting orders until 1 p.m., when all trading of the stock was halted to determine its price on the first day of listing, even though other stocks kept trading until 3 p.m.
The bourse started accepting orders in the Tokyo-based company at 8 a.m. The initial offering is estimated to have raised roughly ¥1 trillion. Trading volume for the stock came to about 940,000 shares.
The listing coincides with a major shakeup in the nation’s insurance industry, with the top six nonlife insurers realigned into three groups in the face of a shrinking market in graying Japan.
At a ceremony to welcome new employees, Dai-ichi Life President Koichiro Watanabe said: “Changing to a publicly listed company is a new beginning. We will make history for Dai-ichi Life with 60,000 employees in the group.”
While nonlife insurers are seeking scale advantages, Dai-ichi Life is thought to have chosen to turn itself into a stock company to access the capital market for fundraising and widen its business options, including mergers and acquisitions with overseas peers through exchanges of shares.
It remains to be seen whether the move will lead to success. Midsize life insurers in the past also turned themselves into stock companies, giving up the status of mutual ownership by policyholders, but there have been no major changes in management styles and the full benefit of becoming a stock company has not been seen, an analyst said.
Dai-ichi Life, set up in 1902 and Japan’s oldest mutual life insurer, generated ¥3.29 trillion in premiums and other revenue in the year that ended in March 2009. It is the second-largest life insurer in Japan after Nippon Life Insurance Co., a mutual company widely known as Nissay. Dai-ichi Life is planning to shift to a holding company by April 2012.
In the process of demutualization, a little more than 7 million Dai-ichi Life policyholders who met policy premium and other conditions were allocated shares or cash.
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