Japan Tobacco price is set at a discounted rate

JAPAN’S monster sale to raise money for rebuilding earthquake and tsunami-devastated areas began in earnest yesterday with the pricing of its offer for Japan Tobacco.

The state, which is selling a third of its stake in the former tobacco monopoly, priced the 253.3m shares at ¥2,949 (£20.54) – a two per cent discount on the last closing price.

The offering was expected to raise about ¥747bn (£5.2bn).

Japan’s finance ministry, which owned just over 50 per cent of Japan Tobacco, is selling a total of 333m shares in the company to fund the reconstruction of areas devastated by the 2011 natural disaster.

The sale reduces the ministry’s holding to around 33 per cent.

Japan Tobacco, whose cigarette brands include Winston, Camel, Benson & Hedges and Mild Seven, bought 80m of the shares from the ministry to reduce the impact of the sale to its stock price.

Daiwa and Goldman Sachs are joint global co-ordinators, with Mizuho as co-bookrunner on the domestic portion and JP Morgan on the international tranche.

The offering – the largest such deal since the US Treasury’s $20.7bn (£13.8bn) sale of American International Group shares in September – is so big it has launched joint bookrunner Daiwa to the top of the Japanese equity capital markets league tables for the current quarter as well as the full financial year.

The fundraising comes on top of tax hikes and government share sales, which the Japanese parliament has introduced since 2011 to finance the estimated $270bn repair costs for the country’s north-east coast.

In January Japanese Prime Minister Shinzo Abe increased the rebuilding budget by ¥6 trillion to ¥25 trillion.

Japan also plans to sell shares of Japan Post Holdings, which runs the nation’s biggest savings institution, to raise further funds.