Sony spins off its insurance company, to raise cash for its other businesses.
Sony announced that it will be selling its stake valued at ¥332 billion ($2.9 billion) in its Japanese insurance business, Sony Financial Holdings Inc., in Japan's largest initial public offering (IPO) of the year to help fund its electronics and gaming divisions. As of October 1, Sony will sell its 725,000 shares (34.5 percent of its shares) and issue and additional 75,000 at about ¥415,000 per share.
"Sony could use the funds for various options to strengthen its electronics and game businesses," said Mitsuhiro Osawa, a Tokyo-based analyst at Mizuho Investors Securities Co. with an "Outperform" rating on Sony's stock. "A cut in the price of the PlayStation 3 is one option."
JPMorgan Chase & Co. and Nomura Holdings Inc. are managing the offering, Japan's biggest since Aozora Bank Ltd.'s ¥351 billion offering last November. Sony Financial will raise ¥31.1 billion from the sale and plans to invest ¥16.5 billion in a venture with Aegon NV, the second-largest Dutch insurer. The division holds Sony Life Insurance Co., automobile insurer Sony Assurance Inc. and online bank Sony Bank Inc.
T&D Holdings Inc., Japan's only publicly traded life insurer, fell 16 percent this year along with the majority of financial and insurance companies. "Investors are still concerned about the losses from subprime loans. The question for the Sony Financial IPO is how it can persuade investors that it is free from that concern," commented Wataru Kasatani, a financial analyst at Meiji Dresdner Asset Management Co.
Shares of Sony (SNE) rose 2.70 percent to $49.07 during trading Tuesday.