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Business

Japan's Recruit plans $2.5bn secondary offering

TOKYO -- Recruit Holdings shareholders will sell more than 60 million shares of the human resources company next month, another sign that Japanese businesses are rethinking strategic stakes amid a heightened focus on corporate governance.

The secondary offering, Recruit's first since going public in October 2014, will involve 61.13 million shares, the Japanese company said Wednesday. The shares, equivalent to 10.8% of outstanding stock, are worth more than 250 billion yen ($2.5 billion) at Wednesday's closing price.

The 13 sellers include Dai Nippon Printing and Dentsu, Recruit's second- and third-largest shareholders, which will unload 12 million shares and 9 million shares, respectively. Japan's three megabanks will offer a total of more than 20 million shares. Top shareholder Toppan Printing will not participate.

The offering price will be based on the stock's close on a date from Sept. 12 to Sept. 14. The shares will be purchased by underwriters, then transferred to buyers six business days after the price is set.

The offering will boost liquidity by putting on the open market part of the roughly 40% of Recruit stock owned by corporate shareholders as of the end of March. Recruit will soak up some of the supply to avoid a glut, buying back as many as 8.5 million shares for up to 30 billion yen between Friday and Aug. 31 via the Tokyo Stock Exchange's repurchasing system.

Japan's corporate governance code that took effect in June 2015 has spurred many businesses and banks to scale back shareholdings intended for strategic rather than investment purposes.

"Certain shareholders have expressed their intention to sell their shares," Recruit said. 

Nomura Securities estimates that cross-shareholdings accounted for 15.7% of the total market capitalization of listed companies at the end of fiscal 2015, down 3 percentage points from five years earlier. The figure will likely keep falling.

Earlier this fiscal year, 28 Mitsubishi group companies participated in a secondary offering of Mitsubishi Research Institute stock. Suzuki Motor and Subaru maker Fuji Heavy Industries dissolved a capital tie-up in which the auto manufacturers held stakes of more than 1% in each other.

(Nikkei)

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