Market wobbles prompt Suntory offer price cut

SUNTORY Beverage & Food Ltd yesterday reacted to turbulence in Japan’s equity markets by setting a lower-than-predicted price range for its initial public offering (IPO).

The IPO, which is Japan’s biggest this year, was tentatively priced at between ¥3,000 (£20.13) and ¥3,800 (£25.50), per share, compared with a previously set indicative price of ¥3,800 per share.

The listing for the Japanese tea and softs drinks seller is set to be a test of confidence for the country’s IPO market.

Suntory planned the offering last year when Japan’s stock market was booming. But recently shares have fallen because of a strengthening yen, Prime Minister Shinzo Abe’s delay in implementing a growth strategy and fears the US will scale back financial stimulus.

The business, a subsidiary of beer and whisky giant Suntory Holdings, is holding the book-building this week.

The fixed offering price will be announced on 24 June and the listing is due to go ahead on 3 July. The size of the IPO will be between ¥375.6bn and ¥475.8bn, based on 125.2m share sales.

So far 17 companies have braved debuts on Japan’s exchanges this year, all with higher opening prices than their pre-market fixed prices. But Suntory said its price range is “reasonable” based on market volatility.

Suntory said it would use the proceeds of the IPO for investments including acquisitions in developing markets, with around ¥350bn for Suntory Beverage, and the remainder of about ¥120bn used for Suntory Holdings, which the firm wants to remain unlisted.