Exclusive-Japan, Tokyo governments target $4.7 billion valuation for Tokyo Metro in IPO, sources say

By Miho Uranaka, Takaya Yamaguchi

TOKYO (Reuters) -Japan’s national and Tokyo governments are seeking a 700 billion yen ($4.7 billion) valuation for Tokyo Metro as they prepare to list the subway operator as early as October-end, three sources said, in what would be the nation’s biggest IPO in roughly six years. 

The two governments, which own 100% of Tokyo Metro, plan to arrange a meeting of brokerages within a week for a briefing on the IPO and expect to receive approval for the listing from the Tokyo Stock Exchange as soon as mid-September, the sources said. 

With half the company to be sold, the initial public offering (IPO) could raise 350 billion yen at that valuation, which would exceed the size of Kokusai Electric’s IPO last year and become the largest since SoftBank Group listed its wireless unit in 2018. 

The Tokyo government said the timing of the sale is being discussed with the national government and is not decided. The finance ministry did not respond to requests for comment. Tokyo Metro said it would not comment on progress on the listing. Japan Exchange Group, which operates the Tokyo Stock Exchange, said it cannot comment on specific companies. 

The IPO follows the listing of other railway operators, including Kyushu Railway (JR Kyushu) in 2016. Tokyo Metro runs 195 kilometres (120 miles) of lines carrying 6.5 million passengers daily. 

Tokyo Metro’s history dates back to 1920 with the establishment of the Tokyo Underground Railway Company. Seven years later, it opened Japan’s first subway line, between the Asakusa and Ueno districts of Tokyo. 

The company, whose business includes real estate and retail, reported net profit jumped by two-thirds to 46 billion yen in the financial year ended March 2024 as economic activity rebounded from the COVID-19 pandemic. 

The central government, which owns 53.4% of Tokyo Metro, plans to use the funds raised to repay reconstruction bonds issued following the 2011 earthquake and tsunami. The Tokyo government holds the remaining 46.6% of the subway operator.

Nomura, Mizuho and Goldman Sachs are the joint global coordinators for the listing.

($1 = 148.9800 yen)

(Reporting by Miho Uranaka and Takaya Yamaguchi; Writing by Sam Nussey; Editing by Muralikumar Anantharaman and Christopher Cushing)

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