Govt studying timing for additional Japan Post share sale

August 20, 2017

TOKYO- The Japanese government is trying to find the right timing for its planned additional sale of shares in Japan Post Holdings Co. which went public about two years ago.

The government was earlier expected to unload part of its holdings in July, but is believed to have given up this because of the stagnant price of Japan Post Holdings stock, informed sources said.

It now hopes to sell a portion in the autumn at the earliest. The Finance Ministry has already picked a securities firm to lead manage the expected sale.

But the government may have to wait until next year if the stock price remains weak, the sources said.

The government now owns 80 pct of Japan Post Holdings, after it sold a 20 pct stake when the company listed its stock on the first section of the Tokyo Stock Exchange in November 2015.

Japan Post Holdings, for which privatization started in 2007, controls mail service unit Japan Post Co., Japan Post Bank and Japan Post Insurance Co. The two financial units went public on the TSE first section along with the parent holding company.

The government plans to reduce its holdings of Japan Post Holdings shares in stages by fiscal 2022 while planning to keep a stake of slightly over one-third.

It is aiming to generate a total of 4 trillion yen from the share sale program to cover reconstruction costs related to the March 2011 earthquake and tsunami that mainly hit the Tohoku northeastern region.

In December 2015, Japan Post Holdings stock rose to as high as near 2,000 yen, some 40 pct higher than its initial public offering price of 1,400 yen. But the stock has since slumped, closing at 1,359 yen on Friday.

Officials of the government say that its total proceeds will reach 4 trillion yen if the planned additional sales take place at levels exceeding 1,230 yen apiece.

But a senior Finance Ministry official struck a cautious note, saying, "It's necessary to keep 1,400 yen in mind" to prevent investors who bought Japan Post Holdings shares at the IPO price from incurring latent losses.

Signs of recovery in the price of the stock are not yet in sight due to the lack of a promising growth strategy at the company.

An Australian logistics company that became a Japan Post Holdings unit in 2015 has performed poorly, forcing the parent to book some 400 billion yen in impairment charges in fiscal 2016, which ended in March.

The company's plan to acquire Nomura Real Estate Holdings Inc. in a bid to foster real estate business into its new pillar or revenue collapsed after negotiations broke down.

Tomoichiro Kubota, senior market analyst of Matsui Securities Co. said that individual investors are unenthusiastic about Japan Post Holdings shares.

They "won't be motivated to invest" in the stock if the situation remains unchanged, he said.

In the meantime, some market sources say that it is not a bad time for the government to sell Japan Post Holdings shares as nearly two years have passed since the stock listing. Jiji Press