Softbank slumps in Tokyo debut after record-breaking IPO
Shares in Japanese telecoms giant Softbank fell 15 per cent during its Tokyo debut as it record-breaking IPO failed to live up to expectations.
Softbank raised roughly ¥2.65tn (£18.5bn) after pricing its shares at ¥1500 a piece in the country’s largest-ever IPO.
But shares in the tech giant closed down 14.5 per cent at ¥1,282, wiping more than ¥1tn off the company's value.
Softbank, founded by Japanese tycoon Masayoshi Son, had opened below its IPO price at ¥1,463.
The disappointing debut may have come as a result of a rare network outage in Japan two weeks ago. Concerns have also been raised about the company’s ties with Huawei.
Earlier this week Japanese authorities banned government purchases of the Chinese telecoms firm’s products over fears the technology could be used for spying.
“Softbank underwent a soft debut on its first day of trading on the Tokyo stock exchange,” said Michael Hewson, chief market analyst at CMC Markets.
“Whether that would have been the case in a more benign market environment is open to question.”
The poor start is rare in the Japanese market. Softbank’s float was only the seventh this year to open below the initial offering price.
The £18.5bn valuation, the second largest in history, raised eyebrows among some analysts at the time of the float. Almost 90 per cent of the initial shares were allocated to domestic investors.
“The valuation is high for a telco in a mature market, but is being supported by the commitment to the high payout ratio and the resulting high yield,” said Chris Lane, senior research analyst at Bernstein.