Walkway with subway line sign at Tokyo Subway Station.
Bruce Yuanyu B | Photo Bank | Getty Images
Shares of Japanese subway operator Tokyo Metro rose nearly 45% on Wednesday after a stellar initial public offering.
The company raised 348.6 billion yen ($2.3 billion) in Japan's largest initial public offering in six years. The shares were priced at the upper end of the IPO price range 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 Japanese National Government and the Tokyo Metropolitan Government, with a stake of 53.4% and 46.6%, respectively.
Reuters reported that the total IPO was oversubscribed 15 times, while the portion available to retail investors – roughly four-fifths of the total size – was oversubscribed by about 10 times.
Reuters reported that the shares available to local and foreign institutional investors, which represent 1.5% and 20% respectively, were oversubscribed more than 20 and 30 times.
Jesper Kohl, senior director at Monex Group, a financial services company based in Tokyo, said the IPO was very well received because the company was a “cash cow.” He added that Tokyo Metro is a “high profit generator and stable cash flow,” and that the company has very low operational risks.
“So whether you're Mr. Watanabe (a retail investor)… whether you're a global investor or an institutional investor, this is a great share to own.”
Cole also noted that Tokyo Metro's dividend outlook is “very stable” and may see a slight increase.
He added that this is because demand for metro service in the Japanese capital remains very strong, and Tokyo's population is growing by approximately 1% every year.
Mio Kato, founder of LightStream Research, told CNBC's “Street Signs Asia” last week that the stock was priced “relatively cheaply,” calling it “a big IPO of the year.”
Japanese stocks have risen sharply in 2023 and the country was the best-performing market in Asia last year, with gains of more than 28%. In 2024, the country's Nikkei 225 stock index hits all-time highs, with a 16.41% year-to-date gain.
