Suntory to raise $3.9 bn in Japan's biggest IPO this year

Japan's Suntory Beverage & Food Ltd plans to raise  ¥388.1 billion ($3.9 billion) in the country's biggest initial public offering this year after pricing near the low end of its range with volatile markets curbing demand.

It said in a regulatory filing today that it had priced its shares at ¥3,100 each. The soft drink maker is a unit of Suntory Holdings Ltd. The price compared with the range of ¥3,000 to ¥3,800 it announced last week for the sale of as many as 125.2 million shares, including over allotment.

The soft drink maker is pricing the Tokyo IPO after Asian markets tumbled over fears of global stimulus cut and Japan's benchmark Topix index fell about 6 per cent in the last two months as disappointed investors thumbed down prime minister Shinzo Abe's growth strategy.

Companies including Hopewell Hong Kong Properties Ltd and Macau Legend Development Ltd scrapped or delayed new stock issues due to poor market conditions.

Bloomberg quoted spokeswoman Tazuko Ikeda as saying over  phone that the company had decided the price on the back of a very volatile market, so it was tough for the IPO.

Last week, the company, set the widest price range for a Japan IPO of above $1 billion in at least five years. According to data compiled by Bloomberg, the share sale by the company was the North Asian nation's biggest since Japan Airlines Co's 663 billion yen offering in September. Suntory Beverage is to  list on 3 July.

The IPO is also being seen as a test of investor appetite for new listings at a time when volatility in Japanese stock markets was high, Reuters reports. The benchmark Nikkei was down 18 per cent since it hit a 5-1/2 year high in late May, according to Reuters.

The company which is privately held is led by president Nobutada Saji, the 67-year-old grandson of the company's founder. The group, which is known for its premium malt beer and whisky, drew half of it revenue from its non-alcoholic drinks unit Suntory Beverage.

According to Suntory Beverage, it expected its net profit to increase 50 per cent to 35 billion yen as also its revenue to increase 14 per cent to 1.13 trillion yen this year. The company had set a target for annual revenue growth of at least 5 per cent over the next three years.

Suntory is second to Coca-Cola Co, in Japan's soft drinks segment and the gap in their market share has been narrowing.

According to Kazuhiro Miyashita, editor of a trade magazine, in terms of domestic share Coca-Cola was 27.9 per cent and Suntory 19.6 per cent. The gap used to be much bigger, said Kazuhiro Miyashita, editor of a trade magazine.