Japanese multinational conglomerate SoftBank Group (SFTBY) is targeting 2.4 trillion yen, or about $21 billion, for an initial public offering (IPO) of its domestic telecoms unit, according to a recent regulatory filing with the Ministry of Finance on Monday. The deal would represent the world's biggest market debut since Alibaba Group (BABA) raised $25 billion for its IPO in New York in 2014. The IPO will effectively split the business in half and provide SoftBank with a trove of capital so that CEO Masayoshi Son can charge ahead with his aggressive technology investment strategy, as outlined by CNBC.
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The news reflects a larger initiative by the Tokyo-based technology giant, which has shifted away from its traditional role as a mobile phone network provider to become a key global technology investor. Son has spearheaded a focus on finding lucrative technology investments, launching the $93 billion Vision Fund in 2017. The fund, which received nearly 50% of its capital investment from the Saudi government, has backed startups including U.S. co-working space WeWork and software platform Slack. SoftBank has also funneled capital into high profile companies like Chinese Internet behemoth Alibaba, as well as Silicon Valley-based ride-hailing industry leader Uber Technologies Inc. and its largest Asian competitor Didi Chuxing.
At a price of 1,500 yen per share, the planned IPO would value SoftBank's mobile division at 7.2 trillion yen, or $63 billion. SoftBank will maintain at least 60% ownership of the domestic telecom business. The conglomerate will also have the option to sell another $2.1 billion of shares given investor demand is strong, which would propel the size of the IPO above $23 billion.
Headwinds facing Japan's mobile business include a pricing war among operators. Earlier this year, SoftBank rival NTT Docomo (DCMYY) announced that it would reduce prices for its cell plans by as much as 40%, leading to speculation that SoftBank will be forced to do the same.
SoftBank indicated that the IPO price is tentative and a final decision will be made on Dec. 10 ahead of the IPO slated for Dec 19 on the Tokyo Stock Exchange.