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Preparations for the IPO of Japan Post — an estimated Y1.5tn ($12bn) listing set to dwarf all others in the country’s history — remain deadlocked on a question of national interest: will there be gifts for the new army of shareholders?
According to people familiar with the IPO plans, the gift debate, which invokes a cherished tradition of corporate Japan, has become a bigger issue as brokerage firms fret over how to make an unwieldy, low-growth behemoth attractive to potential investors.
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If freebies are to be forthcoming, the company must decide what would be appropriate for a former state-owned postal service to offer a market where the tradition of kabunushi yutai (annual shareholder perks) is deeply entrenched and corporate handouts range from prize melons, spa treatments and doughnuts to miniature gold bars, railway passes and illuminated walking sticks.
Japan Post’s internal debate on the gifts remains unresolved as the group approaches the expected listing date of November 4.
The IPO, which will create three listed companies with an expected combined market capitalisation of more than Y10tn, is a key strut of the faltering Abenomics growth programme. The Japan Post IPO, say bankers, represents a rare opportunity to convince large numbers of ordinary Japanese — many still cautious after the bursting of the 1989 bubble — to become stock investors.
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We are currently studying the necessity or not [of offering gifts],” said a Japan Post spokesman. “At this moment, nothing has yet been decided”.
The quality and value of the kabunushi yutai on offer from the various corners of corporate Japan is subject of close scrutiny. Dedicated books, magazines and websites track the annual gifts on offer from each company, correlating their monetary value with current stock prices, dividend yields and price-to-book ratios. Rankings are then produced to help arbitrage corporate generosity and assess which companies are supplying the best-value handouts.
The latest copy of the Kabunushi Yutai Handbook (September edition) highlights the appeal of three companies offering Y5,000 worth of crab, a pair of collagen face masks and a selection of bathroom cleaning products.
With its approval ratings looking fragile, according to analysts, the government of Shinzo Abe is heavily staked on the success of the Japan Post listing and nervous about the market volatility emanating from China.
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With its approval ratings looking fragile, according to analysts, the government of Shinzo Abe is heavily staked on the success of the Japan Post listing and nervous about the market volatility emanating from China.
“I think that we are going to see a lot of market support coming from the government pension fund and other levers being pulled in the weeks leading up to this IPO,” said one banker. “Everyone wants to get the environment looking attractive again, because I think it is unlikely the government will want to postpone the IPO at this stage.”
The autumn flotation of Japan Post Holdings and its two financial units — respectively Japan’s largest bank and largest insurance company — will be the first of what is expected to be three rounds of offerings
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