Shares in Tokyo Metro rose 45% after Japan's biggest IPO in six years
A walkway with subway line signs at a Tokyo subway station.
Bruce Yuanyue Bi Image bank Getty Images
Shares in Japanese subway operator Tokyo Metro rose nearly 45% on Wednesday after a stellar IPO.
The company raised 348.6 billion yen ($2.3 billion) in Japan's largest initial public offering in six years. Shares were priced at the top-end of the IPO price band of 1,100 yen to 1,200 yen.
Tokyo Metro is one of Japan's leading subway companies and the largest operator in Tokyo The company is currently jointly owned by the National Government of Japan and the Tokyo Metropolitan Government, with 53.4% and 46.6% shares respectively.
Reuters reported that the overall IPO was oversubscribed more than 15 times, while the portion available to retail investors – about four-fifths of the overall size – was oversubscribed by about 10 times.
The shares available to domestic and foreign institutional investors, 1.5% and 20% respectively, were oversubscribed 20 and 30 times, Reuters reported.
Jesper Cole, specialist director of financial services firm Monex Group, based in Tokyo, said the IPO was enthusiastically received because the company was a “cash cow”. Tokyo Metro is a “high dividend, stable cash flow generator” and the company's operational risk is very low, he added.
“So are you Mr. Watanabe? [retail investor] … Whether you're a global investor or an institutional investor, it's a big stake to own.”
Cole also noted that Tokyo Metro's dividend outlook is “very stable” and may even see some upside.
That's because demand for metro service in the Japanese capital is extremely strong, and Tokyo's population is growing at about 1% per year, he added.
Lightstream Research founder Mio Kato told CNBC's “Street Signs Asia” last week that the stock has been priced “relatively cheap” and described it as “a big banner IPO for the year.”
Japanese stocks rose sharply in 2023 and the country was Asia's best-performing market last year, with gains of more than 28%. In 2024, the country's stock benchmark Nikkei 225 recorded a fresh all-time high, rising 16.41% year-on-year.
About The Author
