Japan's Biggest Brokerages Still Hungover From SoftBank IPO

(Bloomberg) -- For any investment bank, landing a key role managing your country’s biggest ever initial share sale would be a time to pop the champagne corks. For Nomura Holdings Inc. and Daiwa Securities Group Inc., it has also left them with a hangover.

Yes, Japan’s biggest brokerages secured thousands of new accounts when they sold shares in SoftBank Group Corp.’s telecom unit late last year. And yes, the $22 billion deal generated healthy underwriting fees.

But the IPO flopped big time, falling 15 percent on its Dec. 19 debut and denting sentiment among Japanese investors who remain spooked by last quarter’s stock market sell-off. After mobilizing their sales staff to promote the IPO, Nomura and Daiwa are now trying to get clients back on their side.

“While a very wide range of investors participated in the IPO, the stock’s performance has been a disappointment,” Nomura Chief Financial Officer Takumi Kitamura said this week after announcing the firm’s biggest quarterly net loss in almost a decade. “So honestly speaking, our time has been devoted to following up on this.”

At Daiwa, the retail division devoted a “significant period of time” to sell SoftBank Corp. shares, leaving less time to spend pitching other products, CFO Mikita Komatsu said. The stock is still trading about 12 percent below its initial price.

“This is one of the factors that have kept a lid on enthusiasm among our clients toward investing,” Komatsu said.

To contact the reporters on this story: Takashi Nakamichi in Tokyo at tnakamichi1@bloomberg.net;Takako Taniguchi in Tokyo at ttaniguchi4@bloomberg.net

To contact the editors responsible for this story: Marcus Wright at mwright115@bloomberg.net, Russell Ward

©2019 Bloomberg L.P.