The second biggest IPO in the world, and Japan's largest, has turned into the year's biggest flop.
SoftBank Corporation, the mobile and fixed-line subsidiary of Japan's massive SoftBank Group, saw its IPO debut at the Tokyo Stock Exchange turn into a spectacular dud, losing 15 percent of its value on its first day of trading yesterday.
Softbank Corporation's shares fetched an initial price of 1,463 yen ($13.03) but by midmorning had plunged to 1,392 yen ($12), down 7% from the IPO price of 1,500 yen ($13.41). Shares of SoftBank Corporation closed at 1,282 yen ($11.46), or 14.5 percent lower than its IPO price of 1,500 yen.
The fall gave SoftBank Corporation a market cap of about 6.1 trillion yen ($54.5 billion), some 1.1 trillion yen ($9.8 billion) below its value at the time of the IPO announcement.
SoftBank Group, however, raised about $23.5 billion, making this Japan's biggest ever stock float and the world's second largest after Alibaba's $25 billion listing in New York in 2014. Alibaba raised some $20 billion on its IPO.
Analysts said investors sold-off SoftBank on worries about a four hour-long service outage on Dec. 6 that left subscribers unable to text messages or make payments. SoftBank also suffered from its exposure to Chinese telecom firm Huawei Technologies Co, Ltd, which has been banned by the United States, Australia, New Zealand and the United Kingdom out of espionage fears.
Analysts also noted that Japanese mom-and-pop investors, who bought most of the shares in the IPO, hastily ditched the stock on the first day partly over fears of a damaging price war in the wake of government pressure on SoftBank and other telcos to lower their charges.
NTT Docomo, Japan's biggest wireless carrier, will slash the prices of its mobile phone plans by as much as 40% in 2019 after intense pressure from the Japanese government. Softbank is expected to do the same, as will other smaller telcos. Analysts said a price war will derail SoftBank Group founder Masayoshi Son's grand plans for his empire.
SoftBank Corporation CEO Ken Miyauchi, blamed the disappointing debut on poor market conditions. He said that SoftBank originally planned to IPO in September or October, before delaying it until December.
Son became a major player in the global tech industry after launching the $100 billion Vision Fund in 2017. The fund's biggest single investor, however, is Saudi Arabia, which is becoming an international pariah following the murder in October of Saudi journalist Jamal Khashoggi.
Son made public his "strong regret" over the murder of Khashoggi, but said the Vision Fund will maintain its ties with Saudi Arabia.
