The Nomura Dokudai Myth has been torn apart! Mizuho (MFG.US) is using a global IPO to reshape the Japanese underwriting landscape

The Zhitong Finance App learned that Mizuho Financial Group (MFG.US) is relying on a unique and lucrative track to gain a foothold in the Japanese equity capital market: while taking on the strong demand for artificial intelligence (AI) financing in the US market, while connecting with the huge savings of residents in Japan.

Anthropic's listing is another major deal where Mizuho recently took the lead underwriter seat. The company plans to raise up to 3.5 billion US dollars from Japanese investors. This deal confirms that Mizuho can rely on the results of its US business to compete in a market traditionally dominated by Nomura Holdings (NMR.US) and where local IPOs continue to fall cold.

The company that developed Claude's chatbot is another large-scale financing project to enter the Japanese market after SpaceX (SPCX.US). They are attracted by well-funded individual investors in Japan, and a sales mechanism with a relatively simplified process. According to data from the Bank of Japan, the financial assets of Japanese households are about 2,400 trillion yen (equivalent to 15 trillion US dollars), of which nearly half are held in the form of cash and deposits.

Over the past ten years, Mizuho has continued to expand its US market layout, with the goal of becoming one of the top investment banks in Asia. The results of its long-term investment allowed it to take this batch of IPO underwriting seats and seize the opportunity in front of local rivals such as Nomura, the veteran Japanese stock underwriter. According to compiled data, Mizuho ranked 18th in this year's global stock and equity-related securities underwriting list, the highest ranking among Japanese banks; Nomura ranked 21st.

Although Nomura still holds more than a quarter of Japan's shrinking IPO market, its overseas business advantage is increasingly becoming the core gripper of Mizuho's strategy. Overseas expansion has brought it closer to global issuers, while the local banking network has given it strong domestic distribution capabilities. The combination of the two has formed a strong competitiveness in global underwriting projects.

Industry research analyst Michael Macdad said, “This is expected to form a strong positive cycle: winning a leading global IPO can help Mizuho attract individual Japanese customers; proving the subscription strength of Japanese retail capital to overseas issuers can also help it compete for underwriting qualifications for subsequent global IPOs.”

This kind of overseas sales project has become a key pillar of the Japanese IPO market—the number of local IPOs in Japan is at a 13-year low. According to the data, the Japanese share of Anthropic's current sale alone will be the largest sale in Japan since SoftBank (SFTBY.US) went public in 2018.

The third-largest bank in Japan has also previously participated in the SpaceX project, which raised 2.2 billion US dollars from individual Japanese investors; at the same time, it also undertook the Japanese placement share of PayPay (PAYP.US) invested by SoftBank Group. This is also the largest Japanese company listed on the US exchange in ten years. The above transactions all use the POWL (Public Offering Without Listing) structure: overseas issuers can directly sell shares to Japanese retail investors at the same time as an overseas IPO, without listing on the Tokyo Stock Exchange.

Toyoki Sameshima, an analyst at SBI Securities in Tokyo, said, “Mizuho's influence in the US investment banking market continues to grow, which has helped it win this batch of global projects. The POWL mechanism brought dividends to Mizuho, which not only expanded new customers, but also opened up more business opportunities.”

A Mizuho spokesperson declined to comment. A Nomura spokesperson said that since 2001, Nomura has completed more than 30 POWL transactions and has accumulated mature experience in retail distribution and project review; the association continues to evaluate project opportunities on an order-by-order basis, giving priority to protecting investors' rights and interests, and making full disclosure of information.

Under the leadership of CEO Masahiro Kihara (Masahiro Kihara), Mizuho accelerated its international expansion. The landmark move was the acquisition of the boutique M&A investment bank Greenhill & Co. When Arm (ARM.US) went public in 2023, Mizuho was also among the top four core underwriters, thanks in part to its decades-long partnership with SoftBank Group.

However, in the past, the targets sold through POWL did not bring impressive returns to investors. Since PayPay went public in March of this year, its stock price has fallen below the issue price of 16 US dollars; SpaceX's stock price also broke for a while, and has been fluctuating close to the issue price ever since.

Even so, Japanese investors are very scarce in new shares and are also pursuing the AI concept, which gives them purchasing power that should not be underestimated in large-scale financing projects. Macdad mentioned that Mizuho has used the SpaceX project to prove to the outside world the subscription potential of Japanese capital, laying the foundation for attracting more overseas projects to land in Japan in the future.

“Japanese retail capital is expected to become an increasingly important source of capital in global equity sales,” he said. “Compared to the past, Japan will be better suited to undertake leading global listing projects.”

Mitsubishi UFJ Financial Group (MUFG.US) is also one of the underwriters for this Anthropic project. Mizuho Securities is responsible for the Japanese share coordination for this sale, and institutions such as Goldman Sachs (GS.US), Mitsubishi UFJ Morgan Stanley Securities, Morgan Stanley MUFG Securities, Rakuten Securities, and SBI Securities all accepted investor orders.