Tokyo Metro, which operates most of the Japanese capital¡¯s subway system, is planning to go public in the next financial year ¡ª a major privatization effort by Japan as it seeks to take advantage of a buoyant stock market that has shot to 34-year peaks.
The company, which is 53.4% owned by the national government with the rest held by the Tokyo Metropolitan Government, will be listed in the year that begins in April.
Half of the company is set to be sold with each government planning to sell half their stakes, according to a 2022 government document that laid out plans for the offering.
A Tokyo Metro Initial Public Offering could raise about ?300 billion ($2 billion), the Finance Ministry said in 2022. No updated guidance on the fundraising amount sought was given on Friday.
The central government plans to use the proceeds from its portion of the sale to fund recovery efforts from the massive earthquake that struck Fukushima Prefecture and other parts of northeastern Japan in 2011.
The railway company carries 5.95 million passengers each day on average over a 195-kilometer network of tracks. It posted net profit of ?24.2 billion in the April-September period on sales of ?40.4 billion.
The IPO is likely to attract individual investors, especially given the government¡¯s recent overhaul of a tax-free stock investment program, said Seiichi Suzuki, chief equity market analyst at Tokai Tokyo Research Institute.
¡°Tokyo Metro is also a public transport system which is an easy stock for individual investors to buy into,¡± Suzuki said. ¡°The company¡¯s business is sustainable.¡±
The Tokyo government has set aside ?3.6 billion for costs related to the sales of shares in the upcoming financial year¡¯s budget, according to a document released Friday.
That budget is earmarked for underwriting fees, a Tokyo government official said.
¡°We¡¯ll be discussing the specifics with the relevant parties in the future,¡± Tokyo Gov. Yuriko Koike told reporters, declining to comment on the timing of the listing.
The government in 2022 picked five brokerage firms ¡ª Nomura, Mizuho, Mitsubishi UFJ Morgan Stanley, Goldman Sachs and Bank of America ¡ª to lead the subway¡¯s IPO. It has been delayed due to the COVID-19 pandemic.
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