SoftBank mobile arm shares slide on news of group sale

SoftBank Corp. shares were down as much 3.4% to 1,383 yen on Monday after parent SoftBank Group Corp. announced plans to sell about a third of its holding.

SoftBank Group intends to sell roughly a billion shares worth around $12.5 billion of its mobile-carrier arm, at a discount between 3% and 5%. This is part of a broader push to monetize the larger investment-focused company’s assets to help it weather the pandemic period’s economic disruption and raise funds for fresh investments in tech companies. Its shares were up as much as 4% in Tokyo Monday.

The telecom unit’s initial public offering in December 2018 was a perfect storm of bad news. Just days before the opening bell, the company suffered a rare network outage which left users across Japan without a signal for more than four hours. Investors were also spooked by e-commerce giant Rakuten Inc.’s planned entry into Japan’s wireless market and a global equities sell-off. SoftBank Corp.’s shares are trading about 7% below its debut price of 1,500 yen.

“This is a big overhang near term and may create an even bigger overhang medium term,” Atul Goyal, senior analyst at Jefferies Group, wrote in a report. The sale “is likely a negative surprise” for SoftBank Corp. shareholders, according to Goyal.

SoftBank Group on Friday said it plans to sell 223.5 million shares to overseas investors in Europe and Asia, excluding the U.S. and Canada, with an extra allotment of 33.5 million shares. Domestic investors will get 670.5 million shares. The company aims to hand over the shares between Sept. 23 and Sept. 25, or five business days after the pricing and other details are settled.