Japan’s Softbank shares sink on debut after record IPO

Japan’s biggest-ever IPO and one of the world’s largest — fell more than 14 percent on its market debut Wednesday, after opening 6.40 percent lower.

The company is the mobile unit of billionaire Masayoshi Son’s Softbank Group holding company, which includes U.S. telecoms company Sprint. The group also holds significant stakes in Yahoo Japan and Chinese e-commerce giant Alibaba Group.

Following its $23.5bn initial public offering, shares of the telecoms unit of SoftBank Group Corp fell as far as 1,315 yen ($11.71) by early afternoon, or 12.3 percent lower than its IPO price of 1,500 yen ($13.34).

SoftBank shares closed at 1,282.00 yen, down 14.53 percent. Shares in SoftBank Group, meanwhile, finished the day down 0.91 percent at 8,184.00

SoftBank Corp shares were the most heavily traded on the Tokyo Stock Exchange's first section. SoftBank Group lost 0.7 percent and the broader Tokyo market eased 0.6 percent.

The IPO was just shy of the world record $25bn 2014 listing of Chinese e-commerce giant Alibaba Group Holding Ltd, a SoftBank Group portfolio company.

SoftBank is Japan’s third-largest mobile phone company after leaders NTT Docomo and KDDI, but concerns are rising oversaturation in the market as online retailer Rakuten has also obtained a mobile license and is set to begin offering services in October of next year.

Japan’s mobile telecoms market is the world’s third largest and the government has been pressuring companies to lower prices for their services.

In addition to concerns about competition in the Japanese market, SoftBank has faced headwinds in the run-up to the IPO on other worries, such as the group’s 18 trillion yen ($160 billion) in debt as of the end of September and a nationwide network service outage of more than four hours on December 6 for which the company publicly apologized.

Another issue is SoftBank’s exposure to hardware supplied by Chinese tech giant Huawei, which is under pressure from the United States and other countries suspicious that its telecommunications equipment represents a potential security threat, something that Huawei denies.