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Business deals

SoftBank eyes $18bn IPO for mobile unit

Japanese group looking at offerings in Tokyo and London this year

SoftBank Group Chairman and CEO Masayoshi Son at an earnings briefing in November

TOKYO -- SoftBank Group aims to list its mobile phone unit SoftBank Corp. in Tokyo and overseas this year, possibly bringing in some 2 trillion yen ($18 billion), one of the largest initial public offerings ever for a Japanese company.

The telecommunications giant plans to apply to the Tokyo Stock Exchange as early as the spring with an eye on having SoftBank Corp. trade on the bourse's first section starting around autumn. It's hoping for an overseas debut at the same time, possibly in London.

SoftBank Group intends sell about 30% of the outstanding shares in its subsidiary to investors, keeping a roughly 70% stake. It seeks to gather funds from overseas investors as well due to the massive size of the IPO, which could rival the record 2.2 trillion yen that Nippon Telegraph and Telephone raised in 1987.

SoftBank Group expanded in Japan with telecommunications as its main business by acquiring Japan Telecom in 2004 and the local unit of Britain's Vodafone Group in 2006. SoftBank Corp., which now handles the group's telecom business, is one of Japan's three big mobile carriers along with NTT Docomo and KDDI. The highly profitable mobile operations are SoftBank Group's bread-and-butter business, earning a more than 400 billion yen operating profit for the April-September half.

SoftBank Group has become more of an investment company in recent years, acquiring U.S. mobile carrier Sprint in 2013 and British chip designer ARM Holdings in 2016, in addition to creating the roughly $93 billion Vision Fund with the Saudi Arabian government and others last year. The listing of SoftBank Corp. is meant to give the unit greater autonomy and clarify the business responsibilities of the parent and subsidiary.

SoftBank Group's various overseas acquisitions have caused its interest-bearing debt to balloon to about 14 trillion yen as of September, and its capital ratio was low at 14.6% as of the end of last fiscal year in March. But the group does not plan to use the proceeds from the IPO to pay down debt, instead eyeing investment in growth, such as buying into foreign information technology companies.

TSE rules stipulate that when a subsidiary of a listed company goes public on the first section, the parent's stake must be less than 65%. However, this requirement can be eased if the company lists overseas as well. SoftBank Group is believed to be seeking an IPO on the London Stock Exchange because its Vision Fund is based in London and the group enjoys strong name recognition there.

SoftBank Group released a statement on Monday saying it is "always studying various capital strategy options" and that the listing of SoftBank Corp. shares "is one such option, but no decision has been made to officially proceed with this course."

Shares in SoftBank surged on the report in morning trade, at one point rising as much as 5.8% from Friday's close to 9,460 yen.

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