UPDATE 3-Japan’s Dai-ichi Life plans $11.7 bln IPO

* Will be Japan’s largest IPO since NTT DoCoMo in 1998

* Tentative price is 150,000 yen/share

* To sell Y1.07 trln in shares, market cap of Y1.5 trln
(Adds value of life insurers)

By Junko Fujita

TOKYO, Feb 22 (BestGrowthStock) – Dai-ichi Mutual Life Insurance,
Japan’s second-largest life insurer, said on Monday it would sell
about 1.07 trillion yen ($11.7 billion) worth of shares in the
country’s biggest initial public offering in more than a decade.

Dai-ichi Life is looking to expand overseas to offset its
shrinking life insurance business in Japan as the population
falls.

“Because Dai-ichi does not have much potential for growth in
Japan, it needs to become a public company to make it easier to
raise money to support its expansion,” said Wataru Kasatani, a
financial analyst for MDAM Asset Management in Tokyo.

Dai-ichi Life, Japan’s second only to unlisted Nippon Life
Insurance, plans to list on the Tokyo Stock Exchange on April 1
after completing the process of demutualisation, in which its
stock is distributed to its more than 8 million policyholders.

The company, established in 1902, will not raise any funds
for its operations in the global offering, with policyholders
given the option of holding on to their stock or cashing out.

Dai-ichi said more than 7 million shares would be sold
globally at a tentative price of 150,000 yen each. The final
price will be set on March 19 after gauging investor demand.

The company, whose main building in Tokyo served as
headquarters for the U.S. occupation forces after World War II,
already has a presence in Thailand, Australia and India.

SEEN AS A TEST

Dai-ichi’s IPO is seen as a key test for investor demand for
new issues. The size of Japan’s IPO market dwindled last year to
its lowest since 1992 amid the sluggish outlook for the world’s
second-largest economy.

Dai-ichi’s IPO also comes as other Asian insurers look to tap
the resurgent equity market for funds.

For a graphic on Asia’s top IPOs slated for 2010, click on:
http://graphics.thomsonreuters.com/0210/AS_IPO0210.gif

For a FACTBOX on top Asia IPOS in 2010, click on
[ID:nSGE6110D5]

Korea Life Insurance Co Ltd, that country’s No. 2 life
insurer, aims to raise up to $2 billion in March, in what could
be the country’s biggest initial public offering in four years.
AIA, the Asian unit of American International Group (AIG.N: ) is
planning a $10 billion-plus IPO in Hong Kong next month.

At the indicative price, Dai-ichi would be Japan’s biggest
IP0 since mobile phone company NTT DoCoMo’s (9437.T: ) 2.1 trillion
yen offering in late 1998. Dai-ichi’s tentative price would give
it a market value of 1.5 trillion yen, more than double the value
of rival T&D Holdings (8795.T: ).

“The estimated price of 150,000 yen seems to be relatively
cheap. But will the share price keep rising from here? Maybe
not,” said Mitsushige Akino, chief fund manager at Ichiyoshi
Investment Management.

“I think they are going to be the kind of shares that trade
in a stable manner and attract those investors who are after
dividends.”

Dai-ichi’s embedded value, a measure of insurance companies’
worth that includes the present value of future profits from
long-term insurance contracts, was 2.5 trillion yen in September.
That means Dai-ichi’s market value would be 60 percent of its
embedded value.

That is about the same as T&D Holdings, which had 1.1
trillion yen embedded value in September and a current market
value of about 640 million yen.

Dai-ichi Life’s revenue from the insurance business rose 16
percent to 2.9 trillion yen for nine months through December from
a year earlier. Its fundamental profit, equivalent of operating
profit, rose 18 percent to 265 billion yen.

But the growth was led by Dai-ichi Frontier Life Insurance
Co, a unit that sells variable annuities.

Dai-ichi Life said it would sell 691.4 billion yen worth of
the shares in Japan and the rest overseas.

Of the total shares sold in Japan, Dai-ichi said Japanese
companies, such as Mizuho Corporate Bank, Sompo Japan Insurance
Inc and Bank of Tokyo-Mitsubishi UFJ would buy 2.1 million
shares, helping it establish a base of stable shareholders.

Nomura Holdings Inc, Mizuho Securities and Bank of
America-Merrill Lynch will arrange the initial public offering,
Dai-ichi said.
($1=91.60 Yen)

Investment

(Additional reporting by Kiyoshi Takenaka and Chikafumi Hodo;
Editing by Lincoln Feast)

UPDATE 3-Japan’s Dai-ichi Life plans $11.7 bln IPO