Shares of Sony Corp jumped on Wednesday after the electronics conglomerate said it would list shares of its financial arm on the Tokyo Stock Exchange next month after raising up to $3 billion in an initial public offering to fund its core electronics business.
Sony was up 3.9 percent at 5,830 yen as of 0100 GMT, outperforming the electronics subindex which was up 1.0 percent.
The initial public offering of Sony Financial Holdings (SFH), which oversees the group's online banking and insurance operations, will be Japan's largest this year, and trails Aozora Bank's $3.2 billion IPO last November, according to research firm Dealogic.
Macquarie Research analyst David Gibson said in a report on Tuesday that the listing would allow Sony to post an extraordinary profit of 51-83 billion yen ($438-713 million). He added that Sony was likely to raise its guidance after the IPO or after announcing its earnings results for the first half of the fiscal year.
An SFH IPO confirms our valuation for the business and the improving capital position that Sony will be in, he said.
Gibson reiterated an outperform rating and kept his target share price of 9,000 yen.
Goldman Sachs thinks the move is neutral.
We think the impact of SFH's listing will be neutral for Sony's short-term EV (enterprise value) and earnings, Goldman said in a report on Tuesday. SFH's book value is already reflected as retained earnings in consolidated accounts, and we think profits on the sale of the business will be under 100 billion yen. The brokerage said consolidated net profits will be reduced by the amount of minority interest Sony holds in SFH, although the impact will be limited.
Still, Goldman kept a buy rating on the stock with a 12-month target price of 7,200 yen.
Sony, which is in the final year of a three-year revival plan under Chief Executive Howard Stringer, will offer up to 795,000 existing shares, including an overallotment chunk of 70,000 shares, cutting its stake in the wholly owned unit to 60 percent. The financial unit plans to sell 75,000 shares.
Proceeds from the listing are expected to allow Sony to pour more resources into such growth areas as the liquid crystal display TV business, where it faces fierce competition from Samsung Electronics Co Ltd and Sharp Corp.