Softbank breaks Japanese IPO record Softbank breaks Japanese IPO record Softbank breaks Japanese IPO record

Softbank breaks Japanese IPO record

Summary:  Japan's Softbank raised $23.5 billion in its recent IPO, bringing the total to just shy of the record $25bn set by Alibaba in 2014.

SoftBank Corp. just set a new record, becoming the largest ever IPO in Japan. The Japanese telecom business of SoftBank Group Corp. raised $23.5 billion after being fully subscribed, including an extra allotment. This brings the IPO just shy of the record $25bn 2014 Alibaba IPO and makes it the second-largest ever stock listing, even though shares were mostly sold to local investors.
Shares were priced on December 10 at 1,500 yen/share ($13.25) and an additional 160 million shares were sold to meet strong retail demand, according to a regulatory filing. The expected listing date is December 19. 
The company allocated over 80% of the IPO sale to domestic retail investors, according to Reuters. To generate investor interest, the deal was heavily marketed in a campaign that also used TV adverts to attract subscribers. Yield-starved Japanese retail investors have lapped up Softbank’s promised 85% payout ratio and 5.4% dividend yield. In a country where interest rates are negative and savings yield very little, the 5.4% yield (which outpaces competitors NTT Docomo and KDDI) has been an easy sell. However, there are a number of issues that investors should be wary of. 
The IPO comes at a difficult time for investors, not least because of recent market volatility. The telecom industry in Japan has faced considerable pressure as the government is looking to slash mobile phone charges, asking for rates to be cut around 40%. This regulatory pressure is also combined with increased competitive pressures as e-commerce firm Rakuten plans to enter the wireless mobile market.

As Rakuten have announced plans to enter the market, incumbent NTT Documo is raising concerns about a potential price war by announcing price cuts. The entry of a fourth mobile network operator could cause significant competitive price pressures and crimp earnings for the incumbent operators, Softbank included. This could call in to question future cash flows and the sustainability of the 85% payout ratio. 
With the dark clouds brewing on the horizon for the Japanese telecom industry, the prospect of increased profits for Softbank may be slimmer. With this in mind, it is worth digging deeper into Softbank’s balance sheet where we see that the company has only managed to boost net income in recent years due to tax cuts and reduced deferred tax payments. With competitive pressures looming, this may not bode well for Softbank in the future. 
Another concern is the parent’s (Softbank Group) 67% stake in the company. Softbank group has a large amount of debt. The ownership stake could create governance issues in the future as the group has previously used cash from its wireless division to pay down debt. According to LightStream Research analyst Mio Kato on SmartKarma, SoftBank Group has absorbed 3.1 trillion yen in dividends from its wireless unit over the last three years — and yet its debt – outside Sprint Corp. and Softbank Corp. itself – has surged by 1.7 trillion yen in that time. If this were to happen this would also call into question Softbank Corp’s future profitability and dividend yield.
The 85% payout ratio is ambitious regardless of the threat of price wars and government regulation.  Given the downside risk to the dividend and the tough competitive environment, the offering is likely overvalued at 1,500 yen/share. Despite the strong retail interest at present, it is likely that this euphoria will wear off with time. 


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.