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Wednesday, Nov. 15, 2006

Aozora lists on Tokyo Stock Exchange

Offering by former government-controlled bank biggest stock flotation of year


Staff writer

The formerly government-controlled Aozora Bank went public Tuesday -- eight years after its predecessor, Nippon Credit Bank, was delisted from the Tokyo Stock Exchange -- fetching an initial quote of 495 yen, or 13 percent less than its public offering price of 570 yen.

News photo
A stock ticker inside the Tokyo Stock Exchange shows Aozora Bank fetching an initial quote of 495 yen during its debut on the bourse Tuesday. KYODO PHOTO

It is unusual for a newly listed company to be priced so far below the initial public offering price. Aozora Bank shares ended the day at 502 yen.

The bank floated some 615.8 million shares with an estimated value of about 380 billion yen, making it the biggest IPO so far this year. The offering by Nomura Real Estate Holdings Inc. last month floated 47 million shares worth about 164.50 billion yen.

Aozora Bank President Hirokazu Mizukami played down Tuesday's low share price, saying its business strategy was praised by investors when he met them before the IPO.

"We will continue to do our utmost to increase the value of our company and hope that its performance will be reflected in the stock price," Mizukami said at a news conference at the Tokyo Stock Exchange.

Mizukami said Aozora will focus on specialty finance, offering financial and investment consulting to businesses, adding that the bank is enjoying annual profit growth of 50 percent in this area.

Commenting on the decision to go public after being delisted eight years ago, Mizukami said it is important to maintain a balance between the need to grow and the risks involved in expanding.

"The banking business is about taking risks, which led to the bankruptcy of several banks after the burst of the bubble economy" in the early 1990s, he said. "That is a history we should never forget."

Nippon Credit Bank was delisted from the exchange in December 1998 after it went bankrupt and was placed under government control. The bank was sold to a group of investors including Softbank Corp. and Orix Corp. in June 2000 and renamed Aozora Bank the following year.

Softbank later sold its shares to U.S. investment fund Cerberus Group.

The bank's major shareholders -- Cerberus, Orix and Tokio Marine & Nichido Fire Insurance Co. -- each floated a third of their holdings for the IPO.

The government also sold its preferred shares in Aozora Bank, which it obtained in return for an injection of public funds, by exchanging them for common stock.

Aozora is the second previously government-controlled bank to relist. Shinsei Bank, formerly Long-Term Credit Bank of Japan, returned to the TSE in 2004.

Financial Services Agency chief Yuji Yamamoto expressed hope that Aozora Bank would continue to operate in a sustainable fashion.



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