The latest IPO of Dai- Ichi Mutual Life Insurance has many investors trailing the list to buy a pie into it, but the investors must be aware that the offering are made by Japan’s banks.
The stakes of equity held by the top-three lenders spilled a $12 billion in the year ending March 2009 as the Japanese stocks paralyzed. Due to this reason only Japan’s banks should take up a follow-on the stocks offered.
The bank promised to cut down the intake of massive capital that could have been put to use in, but failed to adhere to the pledge. Further, the Mizuho Financial Group has decided to take the front and has decided to wrap up the matter with a 5.6% stake in Dai-ichi which is worth $930 million.
According to the Mizuho group they have sold over $2 billion of stock holdings in nine months. The same has shaken the foundation of trust that the banks shall keep up to its words. But this is the same stake which the Dai-ichi owns which is known as swapping of shares. However the tension is that due to this strategy they have created a bad management which is now getting stiffer to be handled.
Now the picture is crystal clear which depicts that when the banks and insurers put their stakes in each other, the increase in the risk is an important ingredient of the alliance which both the factors has to face, which in turn affects the entire financial system.
This is a potential and might turn out to be the biggest IPO in Japan since 1998, which could bring great news for the Tokyo Stock Exchange and brokers in Japan who’ve faced and undergone the mishaps of the domestic listings recently.