RPT-Tokyo Metro IPO eyed as option to help fund Japan rebuilding

(Repeats story published earlier on Wednesday)

By Junko Fujita

TOKYO, July 27 (Reuters) - Tokyo Metro Co, which operates a vast subway network stretching across Japan's capital, could be one of the first assets put on the block by the government as it scrambles to raise cash to pay for rebuilding the tsunami-hit northeast.

In the past few days lawmakers have floated the idea of selling the government's stake in Tokyo Metro through an initial public offering, as well as running down holdings in Nippon Telegraph & Telephone and Japan Tobacco Inc .

A Tokyo Metro IPO is seen by some experts as one of the more likely options for the government because it could be implemented fairly quickly and without a revision to the law, as would be required for share sales of Japan Tobacco and NTT.

A listing of the subway operator has been under consideration for years. The Ministry of Finance, which owns 53 percent of the company, has earmarked 115 billion yen ($1.5 billion) in possible proceeds into its budget for this year, based on the assumption it would sell 60 percent of its stake.

"It is desirable to generate cash by selling state-owned shares for the reconstruction efforts rather than raising taxes," said Tomonori Ito, a visiting professor at Hitotsubashi University's graduate school of international corporate strategy.

"The sale of Tokyo Metro is feasible and investors would buy the stock given the company's stable earnings," said Ito, who was co-head of investment banking at UBS Securities in Tokyo until earlier this year.

Japan plans additional spending of 13 trillion yen for rebuilding after the March 11 earthquake on top of a combined 6 trillion yen already set aside in two extra budgets.

To raise the money, it is considering issuing special bonds, scaling back other spending and selling national assets.

The state owns about 22 trillion yen worth of assets in 15 companies. These include Japan Post Holdings Co, Narita International Airport Corporation and Development Bank of Japan Inc, according to the finance ministry's website.

But most of those companies are not seen as candidates to be sold off anytime soon due to legal restrictions on share sales or a need for restructuring before a sale would be feasible.

The government's holdings in NTT, in which it holds a roughly one-third stake, and Japan Tobacco, in which it owns half, have already come down to the minimum required by law.

There is no legal hurdle to a sale of Tokyo Metro. A spokesman for the company, which is owned 47 percent by the Tokyo metropolitan government, said it has been making preparations so that it could IPO at anytime.

Tokyo Metro, which carries more than 6 million passengers each day over a 195 kilometre network of tracks, posted a 36.8 billion yen net profit for the financial year ended March 2011 on sales of 372 billion yen.

"Tokyo Metro shares could have been listed some time ago," said a Tokyo-based investment banker who asked not to be quoted by name given that concrete steps have yet to be taken on the possible IPO.

"I don't see any problem for the government if they went ahead with the sale." ($1 = 78.070 Japanese Yen) (Reporting by Junko Fujita; Editing by Nathan Layne)