The largest initial public offering (IPO) in the world this year got off to a painfully slow start, with more than 30 minutes passing before shares in Japan Post companies changed hands on the Tokyo Stock Exchange.
A decade in the making, three entities went public today: the postal arm, the banking division and the insurance division of Japan Post. But trade remained bid-only for some time amid heavy orders. The postal business, Japan Post Holding, eventually opened up 15.5 percent at 1,617 yen, against an IPO price of 1,400 yen per share.
Japan Post Bank also jumped more than 15 percent to 1,652 yen, from an IPO price of 1,450. Japan Post Insurance was yet to trade at of 9.40am local time. Each business floated just 11 percent of its stock.
The triple IPO, Japan's largest since the 1980s, transforms the 144 year old institution forever, and given that the banking arm alone has 1.7 trillion yen ($14 billion) in assets, the impact will ripple through the Japan's banking sector, its economy and global financial markets.
Hours before the IPO, unusually high security and dozens of company officials and brokerage staff opened the doors to the exchange early in anticipation of heavy media interest. Sections of the exchange were cordoned off as final preparations were made.
The IPO was squarely geared towards the domestic retail sector, which has been reluctant to move assets away from traditional bank deposits into riskier assets, despite repeated nudging by the government over the years.
Ahead of the float, there was strong demand for the shares, with some investors calling it the "stock you have to have."
Japan Post Holding, and Japan Post Bank saw bids more than five times their respective share offer of about 700 billion yen and 600 billion yen, sources told Reuters on Tuesday. Japan Post Insurance, which has offered about 150 billion yen worth of shares, attracted bids about 15 times as many as the offer, they said.
In total, there were 8.6 trillion yen bids for the share offer of more than 1.4 trillion yen, suggesting more than 7 trillion yen of cash would be left without any shares. The cash raised will go to the Japanese Government.
The IPO is the latest attempt by Prime Minister Shinzo Abe to showcase the benefits of a move to investment, rather than savings. The push is part of Abe's so-called Abenomics agenda, which was designed to end decades of deflation. Economists say the results have been mixed, with recent indicators suggesting that the Japanese economy may have slipped back into a technical recession.
Still, brokers say Japan Post is one of the most trusted brands in the country and was sure to lure mom-and-pop investors attracted to stable dividends, especially with interest rates still hovering near zero.
For the global economy, the focus is on the banking arm, where the big asset pool makes it one of the largest institutional investors in the world. It has recently hired executives from Goldman Sachs and Barclays, spurring speculation it is preparing to move money out of the local bond market and into foreign assets.
The combined market cap of the three entities tops 13 trillion yen and several more tranches are expected over the next several years.
Some analysts question, however, whether the postal division will be able to survive the increased scrutiny of being a publicly traded company when revenues from traditional mail are suffering globally. The key, analysts say, is whether the group can use recent acquisitions like Australia's Toll Holdings to transform into a logistics company.