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In Mizuho | Greenhill’s Beyond The Obvious podcast channel, we uncover the value that others miss.
Our podcast is a source for the latest discussions on topics related to capital markets, dealmaking activity, business leadership and more.
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Welcome to another episode of the
Mizuho Markets Mindset.
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I'm here with my colleague, Rich Soto, today to
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talk about the Japanese retail process and its
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applicability to IPOs.
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What exactly is a POWL listing and how is it
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applicable to Japanese retail?
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Yeah.
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Great, Josh.
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So Japanese POWL, or Public Offering Without Listing,
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is a listing alternative in Japan that
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allows U.S. IPO issuers to target Japanese retail
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and institutional demand without actually
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formally having a listing in Tokyo,
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but being able to access both ultra-high-net-worth
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and traditional retail in Japanese markets.
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We hadn't seen these come up for the last 20
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years, but recent changes allowed Japanese
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investors to target U.S. offerings.
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We've now seen two happen this year and we
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expect many more to come.
00:01:06:12 - 00:01:07:22
Maybe Josh, do you want to talk a little bit
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about what changes have led to these new POWLs
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coming out?
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Sure.
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I think really the Japanese retail market over
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I think really the Japanese retail market over
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the last couple of years has evolved considerably.
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Historically, there's about $15 trillion
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of Japanese household wealth
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and only 14% of that has been invested
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in equities.
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About half of that has been sitting in cash.
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And several years back, and really
a change made in
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2024 by the Japanese regulatory authority,
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allowed what's called a NISA (Nippon Individual Savings Account),
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which is based on a similar account system
in the UK, which
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effectively allows Japanese investors to invest
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just north of $100,000 and have their capital
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gains be deferred indefinitely.
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The capital gains rate in Japan for individuals
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is just north of 20%, and this allows them to
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not have to pay capital gains
for the foreseeable future.
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And given that there's $15 trillion of Japanese
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household wealth, every 1% increase represents
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about $150 billion of incremental buying power
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across global equities.
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So being able to take that incremental demand
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from Japanese retail and apply it into these big
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U.S. IPOs is really attractive.
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And that really has increased the appetite for
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equities, not just in Japan,
but on a more global basis.
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And we're really excited about the
opportunity to tap
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this network of wealth and investors who
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historically just have not participated as
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heavily in the equities market.
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So Rich, do you want to talk a little bit about
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the POWL process and what it entails?
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Yeah.
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Look, Josh, we have it down to a science.
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It's about a three-month process with the
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Japanese regulator. The SRS document that gets
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put together,
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it’s essentially a translation of the S1.
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We don't have to go through an extensive list of
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demands from the Japanese regulators.
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I think the one constraint is that you will have to,
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as an issuer, put together all of your 10-Qs,
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10-K equivalents with the Japanese regulator
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for a period of five years.
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Rich, you talked about the two transactions that
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Mizuho has executed in 2026.
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Maybe walk through each of those deals and what
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was unique about those,
and talk about some of the
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metrics that were really interesting coming out
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of both of those transactions.
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So, Josh, Mizuho has been the only bank to do
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POWLs in the last 20 years for U.S. offerings.
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So first we did the PayPay IPO in
March/April of this year.
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That transaction ended up being about 15% of the
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total allocations were to the Japanese POWL.
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So about a billion dollar IPO, $150 million or so
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of Japanese POWL demand allocated.
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In SpaceX, largest IPO of all time, $2.2 billion
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were allocated to Japan,
about 3% of the base offering.
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I think more importantly than that,
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it's very high-quality retail.
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So unlike some of the traditional retail,
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the thinking around retail is that they tend to flip.
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We have all the stats around the trading.
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Only about 22% of the Japanese POWL has traded
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through the first three days of SpaceX, just to
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give you an idea, which just signifies it's not
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like most retail that you see around the world.
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It's very high-quality,
ultra-high-net-worth-focused retail
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that we're seeing out of Japan.
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I think as we see more and more scaled IPOs,
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and obviously there's a lot of rumors out there
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about big deals coming in over the next year,
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we expect more POWLs to happen.
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I think Japanese investors are becoming more and
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more familiar and used to investing in U.S. IPOs.
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So Josh, what do you see for the future of
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the POWL for these deals?
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Who is the right issuer to potentially target
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doing a POWL through Mizuho?
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Sure, Rich.
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I think one of the things that we're seeing is
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as companies stay private for longer, the average
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IPO size is increasing considerably.
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We've seen more than 15 IPOs this year that are
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a billion dollars or more in value.
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We're seeing many deals that are
$2 billion or more.
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And if you look at the pipeline through the end
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of the year, including some of those big
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transactions that have been rumored that you
00:05:03:22 - 00:05:07:00
mentioned earlier, there's probably another dozen
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or so $2 billion or more transactions.
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And as companies think about attracting investors
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on a global basis because they're raising such
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large quantums of capital, I think that this has
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incredible applicability.
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Again, earlier I mentioned the amount of Japanese
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household wealth that's sitting in cash right now
00:05:23:13 - 00:05:25:20
and their appetite to invest in global equities.
00:05:26:12 - 00:05:28:22
So we think this has incredible applicability as
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we move forward and see a lot more jumbo IPOs
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and the definition of jumbo IPOs in the U.S.
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changes as these larger companies
access the U.S. markets.
00:05:38:09 - 00:05:40:19
So thanks again for joining us today.
00:05:41:04 - 00:05:43:15
If you are interested in accessing the Japanese
00:05:43:15 - 00:05:46:09
retail market as part of a jumbo IPO, please
00:05:46:09 - 00:05:48:23
reach out to the Mizuho Equity Capital Markets
00:05:48:23 - 00:05:52:12
team, given our unique exposure and
experience with the product.