Shares of SoftBank Group (TYO:9984) stumbled on Thursday after PayPay, the Japan-headquartered digital payments affiliate, set the price for its U.S. initial public offering below the range it had marketed to investors.
PayPay pegged the offering at $16 per American depositary share (ADS), lower than the previously indicated $17 to $20 band. The decision produced an immediate market reaction in Tokyo, where SoftBank stock dropped 4% to 3,727 yen as of 03:30 GMT.
The transaction raised about $880 million through the sale of roughly 55 million ADSs. Of those ADSs, approximately 31.05 million are being issued directly by PayPay, while around 23.93 million ADSs are being sold by SVF II Piranha (DE) LLC, an investment vehicle ultimately controlled by SoftBank.
PayPay's ADSs are expected to commence trading on the Nasdaq Global Select Market on March 12 under the ticker "PAYP." The IPO is scheduled to close on March 13, subject to customary closing conditions.
Market participants cited in the pricing context pointed to a softer appetite for new listings as geopolitical tensions and broader market volatility weigh on demand. That softer demand for fresh supply in public markets is reflected in PayPay's decision to set the offer below its marketed range, and in the immediate drop in the shares of its parent.
The structure of the offering leaves roughly 31.05 million ADSs newly issued by PayPay and about 23.93 million ADSs sold by the SoftBank-controlled investment vehicle, meaning the deal included both primary capital raised by the company and secondary sales by a vehicle tied to SoftBank.
Investors will watch the scheduled Nasdaq debut on March 12 and the planned closing on March 13 for confirmation that the listing proceeds as outlined. The pricing outcome and subsequent movement in SoftBank's Tokyo-listed stock underline the sensitivity of parent-company equity to the reception of affiliate transactions in public markets.
Sectors affected: Digital payments, technology, financial markets.