UNDATED, May 29: Suntory Holdings Ltd will get the green light to list its food and non-alcoholic beverage unit in Tokyo as it prepares to raise about $5 billion in Asia’s largest initial public offering this year.
The Tokyo Stock Exchange is planning to approve the listing of Suntory Beverage and Food Ltd as early as Wednesday, a person with direct knowledge of the matter told Reuters. The exchange and Suntory declined to comment.
The clearance would set the stage for an IPO that could raise as much as 500 billion yen ($5 billion), banking sources have said, topping a $2.1 billion IPO of a Thailand infrastructure fund as the largest in Asia so far this year.
The Osaka-based drinks maker wants to raise funds for acquisitions overseas, where it has been competing with rivals Kirin Holdings Co Ltd and Asahi Group Holdings Ltd on deals while consumer demand stagnates at home, banking sources have said.
The Suntory Beverage listing follows a strong rally in the Japanese stock market. Even after a recent pullback, the benchmark Nikkei average is up more than one-third since the start of 2013.
But to attract investors, Suntory Beverage, which has said its foreign acquisitions would focus on Southeast Asia, must show it has a workable plan to expand overseas, said Makoto Kikuchi, chief executive of Myojo Asset Management.
‘Domestic beverage demand is saturated. Whether Suntory will be attractive in the beverage industry compared with Asahi and Kirin will depend on its overseas strategy,’ Kikuchi said. ‘Just because the IPO is big doesn’t mean people will buy.’
Suntory, which makes C.C. Lemon brand soft drinks and Yamazaki single malt whisky, has set a goal of more than doubling sales at its food and beverage unit to 2 trillion yen by 2020.
Suntory has acquired soft drinks maker Orangina Schweppes and New Zealand’s No. 2 beverage firm Funcor Group. In 2011, it entered into a joint venture with Indonesian food and beverage group GarudaFood.
Japanese companies spent a record $84.6 billion on overseas acquisitions last year as a strong yen boosted their purchasing power.
While aggressive monetary expansion to spur the domestic economy has deflated the yen, which has dropped by about one-quarter against the dollar over the past six months, Japan Inc’s appetite for overseas assets is expected to remain intact given limited scope for growth in the domestic market and surging stock prices, which would facilitate equity-linked deals.
Suntory is one of Japan’s largest firms that remains privately held, along with zipper manufacturer YKK Corp and Japan’s largest recruiting firm Recruit Co, which plans to list within the next few years to promote expansion overseas.
Companies typically complete the IPO process and list shares about one month after receiving listing approval from the exchange.
Nomura Holdings Inc and JP Morgan Chase & Co are among the underwriters handling the Suntory Beverage IPO, which will be offered to Japanese and overseas investors. (agencies)
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