Japan's biggest initial public offering of the year opened Thursday with shares of Sony Corp.'s financial unit rising nearly 4 percent in their trading debut.
The IPO by Sony Financial Holdings Inc. raised 348 billion yen, or $2.97 billion (EUR2.1 billion) on the Tokyo Stock Exchange. It is part of the manufacturer's efforts to focus on its core electronics business.
The stock closed at 415,000 yen (US$3,547; EUR2,507), up 3.8 percent from its IPO price of 400,000 yen (US$3,419; EUR2,417), after rising as much as 5 percent.
The IPO is the biggest in Japan since Aozora Bank Ltd.'s 379.97 billion yen (US$3.25 billion; EUR2.3 billion) listing in November.
Sony Financial Holdings operates Sony Bank - an Internet bank founded in 2001 that focuses on long-term investments, loans and money management advice - as well as life and other insurance companies. It accounted for 9 percent of Sony's group revenue in the fiscal year ended March.
Sony Corp. has long planned an IPO for the unit as it seeks to embark on a revival centered around its electronics business and shed its stakes in other businesses. As a result of the IPO, Sony's stake in financial company will be reduced to 60 percent from 100 percent.
Sony says it will invest the cash from the IPO on electronics-related research, including a new kind of flat panel called OLED, or organic light-emitting diode display, as well as imaging technology.
Despite lingering worries about the subprime mortgage crisis in the U.S., which roiled global markets in August, analysts say the price could keep rising.
"It's possible that shares of Sony Financial will rise to 500,000 yen (US$4274; EUR3,021) in the near term if individual investors switch to aggressive buying as market sentiment improves," says Mitsushige Akino, general manager at Ichiyoshi Asset Management.
The wholly owned subsidiary of Sony offered 75,000 new shares, while Sony will sell 795,000 of its 2.10 million Sony Financial shares to the public, including an additional 70,000 shares as an option to meet demand.
Sony branched into financial services in 2001 in an attempt to take advantage of its brand power in what was then a burgeoning service in Japan.
Sony Bank, which does nearly all its business through its Web site, is one of many online financial service providers in Japan. It doesn't have any outlets.
For the fiscal year ending in March 2008, Sony Financial forecasts a net profit of 15.0 billion yen (US $128 million; EUR900,000) on 804 billion yen (US$6.87 billion; EUR4.86 billion) sales.
Sony Financial has said it plans to use the money from the offering for the establishment of an annuity business joint venture with Aegon International N.V., and the remainder for a computer system at its three subsidiaries.
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