Sidewalk with subway line signs at a subway station in Tokyo.
Bruce Yuanyue Bi | Image Bank | Getty Images
Shares of Japanese subway operator Tokyo Metro rose nearly 45% on Wednesday following a stellar IPO.
The company raised 348.6 billion yen ($2.3 billion) in Japan’s largest initial public offering in six years. The stock price was at the upper end of the public offering price range of 1,100 yen to 1,200 yen.
Tokyo Metro is one of Japan’s leading subway companies and the largest operating company in Tokyo. The company is currently jointly owned by the national government and the Tokyo metropolitan government, with 53.4% ​​and 46.6% stakes, respectively.
Reuters reported that the entire IPO was more than 15 times oversubscribed, and the portion available to retail investors (nearly four-fifths of the total size) was about 10 times oversubscribed.
According to Reuters, the shares available to domestic and foreign institutional investors accounted for 1.5% and 20%, respectively, and were oversubscribed 20 times and 30 times.
Jesper Coll, a professional director at the Tokyo-based Monex Group financial services firm, said the IPO was warmly received because the company is a “cash cow.” He added that Tokyo Metro is a “company that generates stable cash flow with high dividends” and has very low operational risk.
“So whether you’re Mr. Watanabe (individual investor), whether you’re a global investor or an institutional investor, this is a great stock to own.”
Koll also noted that Tokyo Metro’s dividend outlook is “very stable” and may even have some room for upside.
This is because demand for subway services in the Japanese capital remains very high and Tokyo’s population is growing at almost 1% annually, he added.
Mio Kato, founder of Lightstream Research, told CNBC’s “Street Signs Asia” last week that the stock is priced “relatively cheap” and that the stock is “a big flagship IPO of the year.” He said that.
Japanese stocks have soared in 2023, rising more than 28% last year, making it Asia’s best-performing market. In 2024, Japan’s stock benchmark Nikkei 225 has risen 16.41% since the beginning of the year, hitting a new all-time high.