GMO Internet prepares to sell part of its stake in GMO Financial Holdings

Maria Nikolova

A total of 20,000,000 common shares, equal to 16.7% of voting rights, will be offered at the secondary offering.

Japanese online services provider GMO Internet Inc. (TYO:9449) has today announced its intentions to sell a part of its stake in its subsidiary GMO Financial Holdings Inc (TYO:7177). As a result of the transaction, GMO Internet will still hold more than 50% of the total number of voting rights of GMO Financial Holdings.

The details of the secondary offering of shares of GMO Internet’s subsidiary are yet to be announced but it is already known that 20,000,000 common shares, or 16.7% of the total number of voting rights, will be offered. The offer price will be unveiled next month, probably at some point from October 3 to October 9, 2018.

GMO Internet notes that it has agreed to lend holdings (a maximum of 3 million shares) in GMO Financial Holdings to Daiwa Securities Co., Ltd. for offering by way of over-allotment by Daiwa Securities. Daiwa Securities will have an option to purchase additional common shares of the GMO Financial Holdings from the shareholders up to 3 million shares by using the so-called “Greenshoe Option”.

The purpose of the offering is to help GMO Financial Holdings improve the distribution and liquidity of its common shares.

As a result of the sale, GMO Internet’s ownership of GMO Financial Holdings will decrease to 61.1% if 3,000,000 shares are sold in the offering by way of over-allotment and Daiwa Securities exercises the “Greenshoe Option” for all of those shares.

GMO Financial Holdings will remain a core company in GMO Internet’s Internet Finance segment.

GMO Internet said it expects to register an extraordinary profit on individual accounts due to the sale of shares. However, since GMO Financial Holdings will still be a consolidated subsidiary on the consolidated accounts, and despite capital reserve fluctuations, the transaction will not have any impact on the consolidated results.

In late August this year, GMO Financial Holdings agreed to underwrite a capital increase of GMO Click Global Markets, Inc. The Company underwrote the capital increase with the aim of preparing to accelerate the new businesses as the subsidiary is expected to play a central role in offering services related to transactions to individual investors and also to financial institutions worldwide.

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