The highly anticipated initial public offering of SoftBank Group Corp.'s telecom unit ranked not only among the biggest IPOs of the technology, media and telecommunication sectors but also one of the biggest to record a lower stock value by the end of shares' first day of public trading.
Shares of Japan's SoftBank Corp. ended Dec. 19, the company's first day of trading on the Tokyo Stock Exchange, down 14.4% from the stock's IPO price of ¥1,500 (US$13.34). The IPO raised US$21.39 billion before any exercise of the underwriters' overallotment option, making it the biggest IPO of the past decade in the TMT sectors. Among the top 10 technology, media and telecom sector IPOs since 2008, only electronics component-maker Japan Display Inc. saw a bigger first-day stock fall, losing about 15.5% from its IPO price of US$8.89 after it began trading March 19, 2014, according to data collected by S&P Global Market Intelligence.
Japan Display, formed in 2012 from the merger of display units at Hitachi Ltd., Sony Corp. and Toshiba Corp., raised US$3.14 billion through the IPO after pricing shares at the bottom of its projected range. The company is a key supplier to Apple Inc. for its iPhone and iPad screens.
The SoftBank telecom unit made its trading debut in December amid escalating security concerns surrounding the use of Chinese telecom products that were heightened by the arrest and trial of Huawei Technologies Co. Ltd.'s CFO Sabrina Meng. In the wake of the arrest and rising concerns about Huawei from Western governments, the Nikkei Asian Review reported that SoftBank Group would remove equipment made by the Chinese telecommunications equipment supplier from its 4G network and replace it with hardware made by Ericsson and Nokia Corp.
Earlier this year, the much-hyped debut of Chinese smartphone maker Xiaomi Corp. also stuttered on the first day of trading in Hong Kong. Xiaomi's shares fell 1.4% to HK$16.54 (US$2.14) on July 9, its first day of trading on the Hong Kong exchange, down from an IPO price of HK$17 (US$2.17). Xiaomi's US$4.72 billion IPO also unfolded amid strained U.S.-Sino trade relations, coming just days after the effective day of a round of U.S. tariffs on Chinese goods.
China Tower Corp. Ltd.'s Hong Kong IPO in August saw a tepid response as well, in line with analysts predictions just ahead of the offering. Shares of the Chinese telco ended the company's first day of public trading flat at 16 U.S. cents.
By contrast, Apple supplier Foxconn Industrial Internet Co. Ltd. saw its shares jump by 44% on its first trading day in May following a US$4.24 billion IPO. The Taiwanese smart factory unit of Hon Hai Precision Industry Co. Ltd., or Foxconn, hit the maximum limit on its debut trading in Shanghai, making the company worth 390 billion yuan. The record IPO sparked a Chinese buying frenzy.
Facebook Inc., which had the second-largest TMT sector IPO after SoftBank Corp., saw its shares edge up by less than 1% on the stock's first day of trading in May 2012. The company's IPO was marred by technical problems and questions about whether it had priced shares too high at $38 apiece.
First-day performance has not translated into long-term gains for many of the Asia-Pacific-based TMT companies. As of Dec. 20, shares of SoftBank Corp., Foxconn Industrial Internet, Xiaomi and Japan Display all were trading below their IPO pricing. Facebook, on the other hand, still trades significantly above its IPO price, closing Dec. 20 at US$133.40.
As of Dec. 20, US$1 was equivalent to 6.89 yuan and ¥111.52.