J-Power float thrills overseas buyers
In a year of sparkling equity deals in Japan, the privatisation of Electric Power Development Co, known as J-Power, stands head and shoulders above the other issues.
In size alone the ¥375bn ($3.5bn) sale was impressive ? it was the largest Japanese IPO since the ¥2.1tr ($18bn) quasi-privatisation of NTT DoCoMo, the country's largest mobile phone operator, in 1998.
But perhaps more remarkable was the fact that the entire company was floated in one go. The Japanese government sold its 83% stake and the other 17% of the shares came from the nine Japanese power companies that had stakes in the company, giving it a 100% freefloat.
The IPO was noteworthy, too, for the excitement it provoked. Lead managers Nomura and UBS brought in enough demand to cover the deal more than 11 times and priced it at the top of the range of ¥2,500-¥2,700.
The international institutional tranche of the deal was about 20 times covered. At that price J-Power was valued at 13.4 times forecast profits to March 31, 2005 ? a discount of 10.6% to the average of the nine utilities traded on the Tokyo Stock Exchange.
Three quarters of the stock was allocated to domestic buyers, with 80% of this going to retail investors and 20% to domestic institutions.