SoftBank mulls $18-bn Japan wireless unit IPO to fund its tech investments

SoftBank Group Corp said on Monday it was considering listing its Japanese wireless business, seeking to raise a reported $18 billion in a move that would accelerate the conglomerate's transformation into one of the world's biggest tech investors.

A spin-off – potentially the biggest IPO by a Japanese company in nearly two decades – would also give the unit more autonomy as well as help investors with valuing the business and its parent.

SoftBank Group, which saw its shares climb four per cent on the news, has a vast range of holdings, including stakes in British chip designer ARM Holdings, struggling US wireless service provider Sprint Corp as well as Alibaba Group Holding Ltd.

It has with other investors also set up a $93 billion Vision Fund, that is investing in a range of firms to capitalise on a tech future expected to be driven by artificial intelligence, robotics, and interconnected devices.

SoftBank Group plans to sell some 30 per cent of SoftBank Corp, raising around 2 trillion yen ($18 billion) that would go towards investments in growth, such as buying into foreign information-technology companies, the Nikkei newspaper said without citing sources.

It plans to seek approval from the Tokyo Stock Exchange as early as spring and aims to debut in Tokyo as well as overseas, possibly London, around autumn, the business daily said.

SoftBank Group said in a statement that a listing of the business was one option for its capital strategy but that no such decision had been made.

A 2 trillion yen ($18 billion) IPO would be one of the biggest listings by a Japanese company, rivalling the 2.2 trillion yen 1986 offering of Nippon Telegraph and Telephone Corp as well as a 2.1 trillion yen listing by NTT DoCoMo Inc a decade later.

"It makes sense to spin off the mobile-phone business using a public offering that would leave SoftBank in control and provide SoftBank with more cash to pursue its strategy of investing in companies with potentially high growth prospects," Erik Gordon, a professor at the University of Michigan's Ross School of Business, said. 

"It is a way of obtaining capital without adding debt or diluting SoftBank's equity interests in the growth companies."

The domestic telecoms unit, Japan's No 3 wireless carrier, posted a 4.5 per cent rise in operating profit to 720 billion yen in the year ended March on sales of 3.2 trillion yen.

SoftBank Group's complicated structure and constant stream of new investments have left many investors struggling to value the company with analysts often noting that its market value does not accurately reflect the value of its massive holdings.

SoftBank's market value currently stands at around $92 billion. By contrast, its near 30 per cent stake in Alibaba is worth around $140 billion.

Large companies seeking to list in Tokyo are required to float at least 35 per cent of their shares although these rules can be eased when the company is also listing overseas.