Japan has raised 348.6 billion yen ($2.3 billion) in the largest IPO in nearly six years after Tokyo metro took center stage in its trading debut. Underscoring investor’s appetite for Japanese companies, the IPO was more than 15 times oversubscribed, with the portion available to retail investors around 10 times oversubscribed.
On Wednesday morning on the Tokyo stock exchange, Tokyo Metro shares were recently trading at 1,743 yen, which is 45% higher than the IPO price. The price surged by 36% in the initial trading session.
Tokyo metro is one of the prominent subway companies in Japan and the largest operator in Tokyo. Both Japan’s national government and Tokyo metropolitan government are the joint owner of the company, with a 53.4% and 46.6% stake respectively.
According to the recent report from Reuters, shares available to domestic (1.5%) and foreign institutional investors (20%) were oversubscribed more than 20 and 30 times.
Jesper Koll, expert director at financial services firm at Japan-based Monex Group in Tokyo, said, “the IPO was warmly received due to the company being a ‘cash cow.’ Tokyo Metro is a high dividend, stable cash flow generator.” “The company has a very low operational risk,” he added.
“So whether you’re Mr. Watanabe [retail investor] … whether you’re the global investor or an institutional investor, this is a great share to own.”
As the demand in Japan’s capital for subway services remains very exceptionally high and Tokyo’s population grows at almost 1% every year. So due to this fact, Koll pointed out that Tokyo Metro’s dividend outlook is “very stable,” and may even see a little upside.
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