SoftBank filed for a $21B IPO; no need for a price range


December 3, 2018

SoftBank Group filed for an IPO set to drop next month worth 2.4Tn yen ($21.16B), the second highest IPO ever.

Alibaba Group still holds the record for largest IPO at $25B, but SoftBank’s filing is the first time that a stock will debut on the Tokyo Stock Exchange without a price range: the Japanese tech giant plans to sell shares at 1.5k yen ($13.21) apiece or no dice.

SoftBank’s got swag

Usually, potential investors are given a range to pad out potential adjustments of the final price. But when you’re SoftBank founder Masayoshi Son, you set one price and one price only.

Son and his bankers are betting that they’ll be able to sell all of the shares in the initial public offering of their cash-cow business, which currently has around 34m mobile subscribers and stretches across wireless, broadband and fixed-line services.

Son has a Vision, now he wants multiple

Son is already the biggest investor in the tech space. Last year, he formed a $100B Vision Fund to invest in the fast-growing AI and e-commerce industries.

But, the Vision don’t stop there: With the IPO, Son plans to raise new capital to start a $100B fund every 2 or 3 years.

Despite SoftBank’s confidence, this IPO isn’t exactly risk-free

The IPO looks tasty to investors. Based on SoftBank’s net income in the last fiscal year, investors who buy at the anticipated IPO price would get a dividend yield of almost 5%, which is a sweet deal anywhere, and especially sweet in Japan, a country that Bloomberg labeled the “land of negative interest rates.

BUT…

Japan’s government is increasing its pressure on carriers to lower rates (that are among the highest in the First World). If that happens, SoftBank’s profit could nosedive and jeopardize those tasty yields.

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