Softbank Group Corp shares rose in Tokyo trading after the company said it is considering an initial public offering (IPO) for its mobile phone unit.
The stock yesterday climbed as much as 5.9 percent, the biggest intraday gain since June last year.
Softbank is planning to list its wireless unit in Tokyo and overseas this year and the offering could bring in about ¥2 trillion (US$18 billion), according to the Nikkei newspaper.
Listing the shares is one of the options, but no decision has been made to officially proceed with the IPO, the company said in a statement.
Softbank founder Masayoshi Son has been examining ways to unlock value and boost the conglomerate’s share price.
While the Tokyo-based company has a market value of about ¥10 trillion, it holds assets that could be worth more than that, including a stake in Alibaba Group Holding Ltd (阿里巴巴) that has been valued at more than ¥19 trillion, excluding debt.
Son has also been focusing on the long-term vision for the company, which he built over three decades through a series of high-stakes bets.
Last year, he formed a new fund to invest as much as US$100 billion in the global technology industry.
“Given that you have to apply a massive conglomerate discount to come to a fair value for Softbank, the implication is that this news should send Softbank shares substantially higher,” Pelham Smithers, whose London-based firm offers equity research on Asian technology companies, wrote in a note to clients. “It means that Softbank appears willing to treat operating assets, like investment assets, as tradable commodities.”
An IPO of the mobile unit has been debated inside and outside Softbank for years.
Bloomberg News in 2016 wrote that it is one of Son’s options for closing the valuation gap.
Softbank is planning to apply to the Tokyo Stock Exchange as soon as this spring for a listing on the bourse’s first section with a listing abroad, perhaps in London, about the same time, the Nikkei said.
“The listing of its domestic mobile unit has been one of the key moves we have been anticipating for the firm to raise cash and lower its debt levels,” Amir Anvarzadeh, head of Japanese equity sales at BGC Partners Inc in Singapore, wrote in a note.
Softbank will not use the proceeds from the listing to pay down debt and instead invest the money in overseas technology companies, the Nikkei reported.
The mobile business has an enterprise value of about US$71 billion, Sanford Bernstein analyst Chris Lane said.
Smithers has a similar valuation.
The final amount will depend on how many liabilities are attached to it before the listing, Lane said.
The Softbank group had ¥12.1 trillion of net debt as of September last year.
Softbank’s domestic wireless operations generated ¥913 billion of revenue in the six months that ended on Sept. 30.
Sales fell 4.7 percent from a year earlier because of upfront investments and discounts designed to lure users.
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