As the IPO fever heats up, Japan's largest IPO in 6 years is coming

Against the backdrop of a strong performance in the Japanese stock market and active fundraising by investors, the largest IPO in Japan in six years is coming. On Monday, August 19th, Eastern Time, according to media reports citing three informed sources, the Japanese national government and the Tokyo Metropolitan Government are seeking a valuation of up to 700 billion Japanese yen (approximately $4.7 billion) for Tokyo Metro, and are preparing to list this subway operator as early as the end of October, making it the largest IPO in Japan in nearly six years. In the first half of this year, a total of 60 companies in Japan completed IPOs, reaching a high not seen since 2015. Thanks to the positive performance of the stock market and relatively low listing thresholds, more companies have been able to enter the capital market, including companies in emerging fields such as space-related companies. The listing of Tokyo Metro is another major move following other railway operators such as Kyushu Railway. Tokyo Metro, fully owned by the two levels of government, plans to convene a meeting with securities firms within a week to introduce the IPO situation, and is expected to obtain approval for listing on the Tokyo Stock Exchange in mid-September. If successful, half of Tokyo Metro's shares will be sold, with an expected fundraising of 350 billion yen, exceeding the size of last year's Kokusai Electric IPO. The Tokyo Metropolitan Government stated that the specific timing of the sale is still under discussion with the national government and has not been finalized. The Ministry of Finance and Tokyo Metro have not commented on the matter. Japan Exchange Group (JPX) stated that they cannot comment on specific companies. The history of Tokyo Metro can be traced back to the establishment of Tokyo Underground Railway Company in 1920, and seven years later, the company opened Japan's first subway line. As of 2016, Tokyo Metro operated 195 kilometers of lines, transporting 6.5 million passengers daily. As economic activities gradually recover from the COVID-19 pandemic, Tokyo Metro's net profit increased by two-thirds in the fiscal year ending in March 2024, reaching 46 billion yen. The central government holds 53.4% of Tokyo Metro's shares and plans to use the funds raised from the IPO to repay reconstruction bonds issued after the 2011 earthquake and tsunami. The Tokyo Metropolitan Government holds the remaining 46.6% of the shares. Nomura, Mizuho, and Goldman Sachs are the joint global coordinators for this listing