A sidewalk with a subway sign at a Tokyo subway station.
Bruce Yuanyue Bi | Image Bank | Good pictures
Shares in Japanese subway operator Tokyo Metro soared nearly 45% on Wednesday after a stellar IPO.
The company has raised 348.6 billion yen ($2.3 billion). Largest Initial Public Offering In Japan in six years. The shares were priced At the top end The IPO price is 1,100 yen to 1,200 yen.
Tokyo Metro is one of Japan’s leading subway companies and the largest operator in Tokyo. The company is currently jointly owned by the National Government of Japan and the Tokyo Metropolitan Government, with 53.4% and 46.6% stakes respectively.
Reuters reported that the overall IPO was more than 15 times oversubscribed, while the portion available to retail investors – nearly four-fifths of the total – was about 10 times oversubscribed.
The shares available to domestic and foreign institutional investors are 1.5% and 20% respectively, which have been oversubscribed 20 and 30 times, according to Reuters.
Jesper Cole, specialist director of financial services firm Monex Group, based in Tokyo, Japan, said the IPO was warmly welcomed because the company was a “cash cow”. Tokyo Metro is a “high dividend, stable cash flow generator” and the company has very low operational risk, he said.
“So you are Mr. Watanabe [retail investor] … Whether you’re a global investor or an institutional investor, this is a great stock.”
Cole indicated that Tokyo Metro’s dividend outlook is “very stable” and may even have some upside.
That’s because demand for metro service in Japan’s capital is so strong, and Tokyo’s population is growing by nearly 1% every year.
Mio Kato, founder of LightStream Research, told CNBC’s “Street Science Asia” last week that the stock is priced “relatively cheaply,” describing it as “a big banner IPO for the year.”
Japan stocks rose sharply in 2023 and the country was Asia’s best-performing market last year, with gains of more than 28%. In 2024, the country’s stock market Nikkei 225 posted a new all-time high with year-to-date gains of 16.41%.
