(Adds background, details of previous Japanese share sales)
TOKYO/HONG KONG Feb 20 Japan's government is
set to launch the sale of part of its stake in Japan Tobacco
, a move that hit the company's stock as investors sold
ahead of the $10 billion offering.
Shares in the world's third-largest tobacco company tumbled
as much as 5.9 percent on Wednesday, after Reuters reported that
the sale would launch in the coming days.
The offering, the largest such deal since the U.S.
Treasury's $20.7 billion sale of American International Group
Inc shares in September, comes as Japanese equities
hover near their highest levels in more than four years.
Japan Tobacco shares were down 3.2 percent at 2,832 yen in
late morning, having fallen to a three-week low of 2,752 yen.
The sale of a large block of shares usually prompts a fall in
the price because it will increase the supply of publicly traded
stock in the market.
Banks, including the four underwriters hired to manage the
offering, met on Tuesday to iron out details of the deal,
sources told Reuters.
Conditions for a sell-down in the government's stake in the
$62 billion dollar company have improved, with Japan's Nikkei
share average up nearly 25 percent over the past three
months to its highest level since September 2008.
Japan Tobacco shares rose about 21 percent over the same
period, part of a broad market rally that began in mid-November
after the calling of an early election that put Prime Minister
Shinzo Abe in power a month later.
Abe has promised aggressive monetary and fiscal policies to
tackle prolonged deflation.
APPETITE FOR BIG OFFERINGS
Japan's large and liquid stock market is used to digesting
big offerings, such as the $8.5 billion IPO of Japan Airlines Co
Ltd in September and a $2.3 billion follow-on deal by
All Nippon Airways Co.
Last month U.S. private equity firm Cerberus Capital
Management LP raised about $1.7 billion by selling
shares in Japan's Aozora Bank Ltd.
Overall, equity issuance in Japan rose 16.8 percent in 2012
from a year earlier to $26.4 billion, driven by large IPOs and a
flurry of activity that made it the busiest year for deals since
2008, Thomson Reuters data showed.
But the Japan Tobacco sale would be extraordinary.
The sale process is expected to be helped by both Tokyo's
stock market rally of recent months and a promise by the company
to buy back $3.1 billion of its shares. [ID: nL3E8FQ4YI]
"At the moment, appetite for Japanese stocks seems to be
quiet smart," said a Tokyo trader, who did not want to be named.
JPMorgan Chase & Co, Daiwa Securities Group Inc
, Goldman Sachs Group Inc and Mizuho Securities
were hired last June as underwriters for the Japan Tobacco
offering. Japan's biggest brokerage, Nomura Holdings Inc
, was not selected as an underwriter after its
involvement in an insider trading scandal.
The mandated banks invited other banks playing lesser roles
in the sale at Tuesday's meeting, which was called to inform
them of the planned schedule for the offering, the sources said.
(Reporting by Dominic Lau and Elzio Barreto; Editing by Michael
Flaherty and Alex Richardson)