Japanese subway operator Tokyo Metro’s share rose almost 45% on Wednesday after a stellar IPO. Tokyo Metro IPO is Japan’s largest initial public offering in six years and raised $2.3 billion. Tokyo Metro, one of the capital’s two major subway operators, share was trading at a price of 1,730 yen ($11.41) in the morning after opening untraded with a excess of buy orders.
Tokyo Metro forecasts a dividend of 40 yen per share for the financial year ending March 2025 and this has appealed the investors.
Tokyo Metro IPO and dividend
The subway operator Tokyo Metro raised 348.6 billion yen after pricing its IPO at the top of an indicative range at 1,200 yen apiece. Tokyo Metro IPO was more than 15 times oversubscribed, with investors drawn to a household name with an attractive dividend yield.
Tokyo Metro share oversubscribed
The Tokyo Metro shares were available to domestic and foreign institutional investors. They were accounting for 1.5% and 20% respectively, were oversubscribed more than 20 and 30 times, Reuters reported.
Tokyo Metro IPO largest in Japan
The company’s history dates back to 1920 with the establishment of the Tokyo Underground Railway Company. Seven years later, it opened Japan’s first subway line, between the Asakusa and Ueno districts of Tokyo. It runs 120 miles of lines carrying 6.5 million passengers daily.
Tokyo Metro is one of Japan’s leading subway companies and the largest operator in Tokyo. The company is currently owned jointly by Japan’s national government and the Tokyo metropolitan government, with a 53.4% and 46.6% stake respectively.
Tokyo Metro’s IPO is the largest in Japan since SoftBank Group listed its telecoms unit in late 2018.
Tokyo Metro a lucrative IPO
Jesper Koll, expert director at financial services firm at Japan-based Monex Group in Tokyo, said the IPO was warmly received due to the company being a “cash cow.” Tokyo Metro is a “high dividend, stable cash flow generator,” and the company has a very low operational risk, he added.
As per Mio Kato, founder of LightStream Research, the stock has been priced “relatively cheaply,” describing it as a “a big banner IPO for the year.”
Profitability of Japanese IPOs
Rigaku Holdings, a maker of X-ray testing tools, raised $863 million in its IPO. This was after pricing shares at the top of the range and will debut on Friday.
There have been $4.9 billion worth of IPOs year to date in Japan, the largest amount in six years.
Stock update Japan
Japan stocks rose sharply in 2023 and the country was Asia’s best-performing market last year, with gains of over 28%. In 2024, the country’s stock benchmark Nikkei 225 has recorded fresh all-time highs, with year-to-date gains of 16.41%.
