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Strong Foreign And Domestic Demand For SoftBank Telco IPO

Strong Foreign And Domestic Demand For SoftBank Telco IPO
According to media reports quoting a couple of sources from a lead IPO underwriter, the strong demand for Japan's third-largest telcom company of SoftBank has been demonstrated because the demand from domestic Japanese investors for shares in its initial public offering is nearly double of the number of shares that re being offered by SoftBank Group Corp's soon-to-list wireless unit.
Reports also quoted sources saying that the more than three times the number of available shares has also been demanded by overseas institutional investors. The reports did not mention the names of the sources because they are not authorised to disclose the figures publicly. More than 80 percent of the offering will be bought by domestic investors.
All its allotted shares in SoftBank's telecoms unit, announced Japan's SBI Holdings earlier in the day which further underscores the very strong retail demand for the IPOs.
SoftBank’s telecom company’s IPO is said to be the largest ever in Japan and SBI is amongst the lead underwriters for the domestic portion of that IPO. Earlier there had been a rumour of lower-than-expected appetite because of an error by that firm in relation to its allocation of shares to investors.
This week, the price of the shares of SoftBank’s telecoms unit, SoftBank Corp, was set at an indicative price of 1,500 yen (US$13.22) per share. The company said that it would raise a additional US$23.5 billion by selling its reserve shares - 160 million in number, which it has set aside earlier so that it is able to meet the demand for the IPO.
Burt before the unit's trading debut in Tokyo on Dec. 19, there are some concerns among investors.
Such concerns include the examination and scrutiny that the company would have to face because of its relationship with Huawei Technologies because many governments – especially in Western countries have banned and prevented the Chinese firm from supplying its equipment to important telecommunication projects. Huawei has been alleged to have close ties with the Chinese government who use its equipment installed in other countries to spy on them.
Reports have also claimed that the 4G network equipment from Huawei that SoftBank is already using would be replaced by hardware from other companies. but the reports also said that this process would be a long and time consuming one as well as cost intensive.
Last week, there was a nationwide network disruption for SoftBank customers where the company was using equipment supplied by Ericsson which fell prey to a software glitch which has also raised concerns about the reliability of equipment supplied by alternative companies.
Following the disruption, the SoftBank Corp CEO Ken Miyauchi had to rush to Japan’s telecoms ministry to tender a formal apology for the incident. According to reports, an official reprimand of SoftBank for the incident is being planned by the Japanese government and asking it to make sure that such disruptions do not happen in the future.

Christopher J. Mitchell

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