* Nomura had admitted to employees leaking inside
* JPMorgan, Goldman, Daiwa and Mizuho picked for share sale
* SMBC Nikko also left out of deal
* Nomura declines to comment on exclusion
By Junko Fujita and Nathan Layne
TOKYO, June 18 Japan has excluded Nomura
Holdings from working on the government's sale of
roughly $6 billion worth of Japan Tobacco shares, in a
blow to Japan's largest broker as it grapples with an insider
The Ministry of Finance said in a statement on Monday it had
chosen JPMorgan Chase & Co, Daiwa Securities,
Goldman Sachs and Mizuho Securities as underwriters for
the share sale by the world's third-largest cigarette company.
But it was the absence of Nomura, which dominates Japan's
underwriting market with an unrivaled network of retail clients
across the country, that caught the market's attention.
"This is the sort of deal that one would have expected
Nomura to be a shoe-in for," said Makarim Salman, head of Japan
financials research at Jefferies in Tokyo.
"Investors will start to worry whether there will be other
such announcements on the horizon, particularly with Japan
Airlines' IPO coming up."
The decision came after Nomura earlier this month
acknowledged for the first time that its employees had leaked
confidential information on three separate public share
offerings in 2010, confirming the findings of regulators, which
have been probing the matter for months.
The finance ministry is planning to cut the government's
stake in Japan Tobacco to one-third from half to raise money to
help fund reconstruction efforts in areas devastated by last
year's earthquake and tsunami.
The deal will easily rank as one of the largest equity
offerings in Japan this year and was actively sought by banks
eager to gain a track record with the government, even though
the fees are expected to be relatively small.
Japan Airlines Co, which has emerged from
bankruptcy, is looking to relist its shares on the Tokyo Stock
Exchange in mid-September, in an IPO worth about 600 to 700
billion yen, according to a source with knowledge of the matter.
Nomura has been selected as a global co-ordinator for that IPO.
Nomura had been one of nine investment banks shortlisted
earlier this month in the first round of bidding for the Japan
Tobacco share sale.
SMBC Nikko Securities, which ranks as the No. 2 underwriter
in Japan so far this year, was also excluded from the offering
in Monday's announcement by the finance ministry.
The finance ministry has employed a new numeric scorecard
for selecting underwriters for the Japan Tobacco offering. Among
other factors, the scorecard put a lot of weight in the second
round of bidding on the broker's strategy for selling Japan
Tobacco shares, its proposed fee, and compliance.
These factors could explain why JPMorgan and Mizuho were
selected for the first time as underwriters for a Japanese
government share sale, while experienced brokerages such as
Nikko and Nomura were left off the deal.
The ministry may also have weighed the risk that Nomura
would be punished by the financial regulator, since that would
disqualify it as an underwriter of state-owned shares.
"The selection is just part of the preparation for the sale
and actual timing or size of the sale has not been decided," the
ministry statement said.
Nomura declined to comment on Monday about its exclusion
from the deal.