Japan's SoftBank hopes to raise about 2 trillion Japanese yen (US$18 billion) through an initial public offering (IPO) of its telecom business, according to a report in Japan's Nikkei newspaper.
The company would list about 30% of outstanding shares in the business, retaining a 70% stake, and is eyeing a listing in both Tokyo and London, suggests the Nikkei report.
It reportedly plans to use the proceeds for investment in technology companies and not to pay off its substantial debts, which had risen to about JPY14 trillion ($126.5 billion) at SoftBank Corp. in September, according to the Nikkei report.
SoftBank's share price closed up 3.22% in Tokyo following today's news, at JPY9,223 ($83.38).
Under the leadership of Japanese billionaire and company founder Masayoshi Son, SoftBank has made a series of ambitious overseas investments during the past few years, buying stakes in foreign telecom firms, Internet companies and hardware makers.
Acquisitions have included a £24 billion ($33 billion) purchase of UK chipmaker ARM Ltd. in 2016, the takeover of US mobile operator Sprint Corp. (NYSE: S) for more than $20 billion in 2013, and the $2.1 billion move for a 51% stake in Finnish gaming company Supercell in the same year.
SoftBank subsequently sold a majority stake in Supercell to China's Tencent in 2016 amid growing concern about its debt profile.
In a brief statement on its website, issued in response to the Nikkei report, SoftBank said that it was considering an IPO but had not taken any final decision on one.
"With regard to today's Nikkei report on the listing of SoftBank Corp, a subsidiary of SoftBank Group Corp, we are always studying various capital strategy options," said the company. "The listing of SoftBank Corp shares is one such option, but no decision has been made to officially proceed with this course."
According to the Nikkei, a parent is not allowed to own more than 65% of a subsidiary it lists on the Tokyo Stock Exchange. The rule may be relaxed, however, if the division is listed overseas as well, which could explain why SoftBank is looking into both a Tokyo and a London listing.
SoftBank will next month publish results for the quarter ending in December but generated about JPY4.4 trillion ($39.8 billion) across all of its businesses in the six months to September, 3.3% more than in the year-earlier period, thanks largely to favorable currency movements and gains at ARM and its Yahoo Japan subsidiary. (See SoftBank to Increase Sprint Stake as Vision Fund Boosts Earnings.)
SoftBank's operating income for that period soared 35.1%, to nearly JPY874.8 billion ($7.9 billion), due to the recognition of profits from the Vision Fund, a $100 billion fund it set up with other high-profile investors to back technology companies in various sectors.
Despite its moves outside the traditional telecom arena, SoftBank continues to generate about three quarters of its sales from its telecom businesses at home and in the US.
Telecom revenues dipped in the six months to September in local currency terms, although Sprint recorded a sharp improvement in profitability as a result of cost-cutting efforts.
— Iain Morris, News Editor, Light Reading