Tokyo Report: Dai-ichi Life to Go Public amid Split Views

Tokyo, Jan. 25 (Jiji Press)--Dai-ichi Mutual Life Insurance Co.
will go public in April, with an estimated market capitalization of one
trillion to 2 trillion yen, amid split views on how this will affect the
stock market.

Dai-ichi Life, now a mutual company owned by policyholders, will
transform itself into a stock company in an apparent bid "to raise funds
from the market to prepare for future mergers and acquisitions," says Shiro
Yoshioka, an analyst at Japaninvest PLC.
Analysts such as Yoshioka see M&As and forays into overseas markets
as indispensable for the continued growth of Japanese life insurance
companies struggling in the saturated domestic market.
The stock market is currently under downward pressure from a series
of public offerings of new shares that began last summer.
Dai-ichi Life's market debut may be an additional unfavorable
factor, depending on the market environment, said an official at a midsize
brokerage house.
In 2009, a succession of public offerings of new shares was led by
big banks in the face of accelerating moves by international regulatory
authorities to toughen capital adequacy rules for banks. Anxiety over
dilution of per-share earnings weighed on the stock market.
The downward pressure abated after the Basel Committee on Banking
Supervision in December proposed a long grace period before the introduction
of stricter capital requirements.
Concerns about supply and demand on the stock market returned
earlier this year when Sumitomo Mitsui Financial Group Inc. <8316> decided
on a huge public offering.
Analysts expect public offerings to continue to be active in 2010.
"In the wake of the Lehman shock, businesses remain eager to reduce credit
risks by boosting their funds on hand," says Takahiro Tsuchiya, senior
strategist at the Daiwa Institute of Research.
Dai-ichi Life will offer 10 million shares to the public, but it is
unclear how many of these will become available on the stock market.
Nevertheless, the impact of its listing will not be small.
Some analysts forecast that the market will be affected
unfavorably, because institutional investors will sell other shareholdings
to buy Dai-ichi Life shares before the stock is included in May in the TOPIX
index of all stocks traded on the first section of the Tokyo Stock Exchange.
But Nobuyuki Fujimoto, market analyst at kabu.com Securities Co.,
says Dai-ichi Life's debut on the stock market will be a boon for the
Japanese economy.
With more than three million policyholders receiving shares that
are expected to be worth 100,000 yen or more apiece, the listing should
generate effects "incomparably larger" than the previous government's
one-time cash handout of 12,000 yen per person under its stimulus package,
he suggests.
Securities companies expect the creation of more than three million
shareholders to lead to a steep increase in accounts for stock trading.
Noting that insurance policyholders have certain levels of income
and so are excellent customers for securities companies, Fujimoto forecasts
that the listing of Dai-ichi Life will affect the stock market more strongly
than that of Nippon Telegraph and Telephone Corp. <9432> in 1987.
Dai-ichi Life's listing will also be watched closely by other life
insurers, as it may encourage their own policyholders to demand similar
moves.