SoftBank prices IPO at $13.32, to raise $23.5 bn with overallotment

SoftBank Corp priced its initial public offering (IPO) at 1,500 yen per share and will sell an extra 160 million shares to meet strong demand, a regulatory filing showed, raising 2.65 trillion yen ($23.5 billion) in Japan's biggest-ever IPO.

That makes the share sale one of the largest of all time globally, just shy of the record $25 billion that Chinese e-commerce firm Alibaba Group Holding Ltd raised in 2014.

The price set by SoftBank Group Corp's Japanese telecommunications unit was unchanged from the indicative price and its overallotment option will be exercised in full, the filing to the finance ministry showed on Monday.

The shares begin trading on Dec. 19.

The IPO price and overalloment came just days after Japan's third-largest mobile phone network provider by subscriber numbers suffered rare nationwide service outage. SoftBank said the disruption would not affect its earnings and dividend forecast made on Nov. 12.

But other causes of concern abound. The government wants to see a decline in mobile phone charges just as competition is set to increase with the market entrance next year of e-commerce firm Rakuten Inc.

Moreover, sources told Reuters that Tokyo plans to ban government purchases of equipment from China's Huawei Technologies Co Ltd - a telecommunications infrastructure firm with which SoftBank has a long relationship.

SoftBank conducted trials of fifth-generation (5G) network technology in partnership with Huawei - the first Chinese firm to join Japan's conservative Keidanren business lobby, in 2011.

To stimulate interest in SoftBank's IPO among retail investors, the deal's domestic lead underwriters have pursued an unprecedented marketing campaign, including what are believed to be Japan's first TV adverts for a private firm's IPO.

SoftBank is widely perceived to be a mature business - and so is considered to have relatively slower growth prospects - and the huge number of shares on offer has raised concern of oversupply. Still, brokerages said they would be able to attract enough investors with SoftBank's dividend alone.

Its 5 percent dividend yield - a percentage of dividend income against the stock price - is among the highest in Japan.

(Click for an interactive graphic showing the dividend payout of Japan's three biggest telcos: https://tmsnrt.rs/2SwyWIo)

Brokerages said SoftBank likely set the indicative price of its shares at 1,500 yen - rather than a price range, as is the norm - to keep its dividend yield at 5 percent.