'Enormous whale' Japan Post to make Tokyo trading debut

Japan Post is set to make its long-awaited market debut after the year's biggest share sale, in what some see as a test of Tokyo's bid to shake up the country's rigid corporate culture and lure more foreign investors.

Shares in the vast company, along with its banking and insurance units, start trading in Tokyo on Wednesday after an initial public offering that topped $11.5 billion.

It is the biggest stock offering globally since Chinese e-commerce giant Alibaba's record $25 billion IPO last year.

The bulk of proceeds from selling shares in the government-owned behemoth, which has about 24,000 offices nationwide, are earmarked for reconstruction efforts after Japan's 2011 quake-tsunami disaster.

Tokyo is expected to sell off more of the company down the road to help pay for spiralling social-welfare costs in Japan's biggest privatisation since Nippon Telephone & Telegraph's 1987 IPO.

The triple-listing brings with it hopes that privatising what is effectively the world's largest bank will help draw more investment in Japanese firms, and give a lift to Prime Minister Shinzo Abe's faltering "Abenomics" growth blitz.

Analysts said shareholder pressure would help force Japan Post to speed up its decision making and control costs.
It could also send a wider message that Japan Inc.'s notoriously rigid corporate culture is being shaken up.

"If the Japan Post stock offering goes well, it will boost interest in investing" in Japan, said Mitsuo Shimizu, deputy general manager of Japan Asia Securities Group.

The company's mail delivery unit, a big source of national pride in Japan, will remain untouched largely due to social and political pressure to maintain the status quo, including the presence of post offices across the nation even in the most remote villages.

These offices also offer services for cash deposits and insurance, and a local branch where many of Japan's legions of retirees withdraw their pension payments.
- 'Enormous whale' -
That system, however, has long drawn criticism both inside and outside Japan.

Financial institutions, carrier services and foreign governments argued that the public body was operating in sectors where it competed directly with private businesses.

Yasuhide Yajima, chief economist of NLI Research Institute, was upbeat about the company's market debut, but warned that Japan Post must overhaul its lumbering style.
"One of the company's greatest advantages is its nationwide network. The downside is its lack of cost-consciousness," he said.

"The biggest risk though is that the company lacks a sense of speed -- Japan Post is like an enormous whale."

The government of former prime minister Junichiro Koizumi split the company into four units in 2007, to handle deliveries, savings, insurance and counter services at each of its post offices.

The government retained full ownership of the group at first, with plans for the bank and insurance units to go fully private by 2017.

The privatisation project was stalled after the long-ruling Liberal Democratic Party lost power, but was revived after the party returned to power in late 2012.

The sale was a hit at home with many mom and pop investors eager to get their hands on Japan Post shares, with the effort getting a boost from plenty of Internet and television coverage.

Still, the listing could face headwinds as slowing global growth threatens to make for a rocky few months on equity markets.

"Questions about whether the United States will raise interest rates and the Bank of Japan will launch more monetary easing could make financial markets quite a harsh playing field over the next two or three months, even for professionals," said Yajima at NLI Research.

"Individual investors could panic if the price drops -- I hope things don't turn out that way."