Monday, 11 December 2023

SoftBank Corp. to Seek Over $800 Million Via Bond-Type Stock


SoftBank Corp. will decide as early as Monday to raise as much as ¥120 billion ($809 million) via Japan’s first public offering of bond-type class shares, according to people familiar with the situation, Bloomberg reported.

The telecommunications unit of billionaire Masayoshi Son’s holding company plans a board of directors’ meeting to approve sales of the new shares, said the people, who asked not to be identified because the information hasn’t yet been made public. The securities give their holders no voting rights nor the right to convert them to common stock. SoftBank filed a shelf registration in May that said it might issue the shares sometime by the end of May 2025.

SoftBank’s representatives declined to comment.

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The class shares will be listed on the Tokyo Stock Exchange and are likely to attract retail buyers because of SoftBank’s strong name recognition and a dividend rate estimated at 2% to 4% for the first five years. Investors in the securities will also be able to enjoy tax exemption through the Nippon Individual Savings Account program, or NISA, the people said.

Interest rates in Japan remain at rock-bottom levels even after their global counterparts have risen, and the country’s central bank last week tamped down speculation of any near-term hikes. That increases the need for investments with better returns, especially amid the risk that Japan’s ¥1,107 trillion pool of household savings may be drawn more and more to higher-yielding investments abroad, further weighing on the yen.

“The company has name value, and the fact that they have relatively high yields and are eligible for NISA may attract individuals,” said Hiroshi Namioka, chief strategist at T&D Asset Management Co. “Since the characteristics of the product are unfamiliar to retail investors, it is necessary to provide a good explanation of the product.”

The annual dividend rate of the class shares will fluctuate after the fifth year, and SoftBank has the right to repurchase them at an amount equal to the issue price, the people familiar with the matter said. The funds raised will be used for growth investments related to telecommunications and information technologies, as well as next-generation social infrastructure.

The offering will be mainly aimed at individuals, as well as some institutional investors, according to the people.

SoftBank will likely announce details of the offering as early as Monday, including the actual amount, sale and pricing dates and underwriters, the people said. It will conduct a book-building process with bond and equity investors to decide the terms, and Nomura Securities Co. will be the lead underwriter for the deal, they said.