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Japan Post's mega IPO: A saving grace for Abenomics?

By NexChange
Capital Markets

Japan Post's complex three-piece stock market debut is now coming to frutition with Japan Post Holdings pricing at the top end of  its indicative range at 1,400 yen, raising 693 billion yen ($5.7 billion).

The pricing comes a week after Japan Post's banking and insurance units also priced at the top of the range after strong appetite from individual investors. About 11% of the companies will be sold with each listing seprarelty, but simultaneously, on November 4.

The IPOs are expected to raise a combined 1.6 trilllion yen. It's the Japan's biggest listing since NTT Docomo in 1998, and its largest privatisation since Nippon Telegraph & Telephone Corp in 1987.

Due to the political sensitivity of Japan Post's privatisation it has taken the government about a decade to get to this point. With strong demand coming from retail investors — despite recent volatility in Japanese stock markets — the triple offering is proving to be a massive coup for Abenomics, the name for Prime Minister Shinzo Abe's raft of sweeping economics reforms.

Abe has been in for a lot of flak recently thanks to stalled progress on his strucutral reforms, the so-called third arrow of the Abenomics agenda. His government's decision to abandon the country's pacifist constitution has also seen the leader's approval ratings sink like a stone.

If all goes well when the bell rings,  Japan Post's successful listing will help validate Abenomics and restore public faith in the government's reforms.
Photo: Konstantin Leonov

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