Dai-Ichi Life Is Said to Hire Nomura, Merrill for IPO

Dai-ichi Mutual Life Insurance Co. hired Nomura Holdings Inc., Merrill Lynch & Co. and Mizuho Financial Group Inc. to sell its shares in Japan’s biggest initial public offering in a decade, two people familiar with the sale said.

Nomura, Merrill and Mizuho’s securities unit are preparing to sell more than 1 trillion yen ($11 billion) of the insurer’s shares in Japan and overseas, said the people, who declined to be identified before a public announcement. Dai-ichi Life will list on the Tokyo Stock Exchange on April 1, 2010, the company said in a statement on its Web site today.

Japan’s second-biggest life insurer plans to convert to a joint-stock company with a market value of as much as 3 trillion yen, according to a document prepared by the company and obtained by Bloomberg News in December 2007. The deal would boost the sagging market for initial public offerings in Japan, which slumped 80 percent from a year earlier to 123.2 billion yen in 2008, according to T&C Financial Research Inc.

“Investors around the world will show interest in the life insurer’s public offering because it’s global and the stock will be big enough to be included in benchmark indexes,” said Kazumi Tanaka, a Tokyo-based analyst for initial public offerings at T&C Financial. “Still, it may face some difficulty if severe market conditions continue.”

Nomura spokesman Shuji Sato, Merrill Lynch’s Tokyo-based spokesman Tsukasa Noda and Mizuho spokeswoman Masako Shiono all declined to comment, as did Dai-ichi Life spokesman Makoto Atarashi. The company is owned by its 8.4 million policyholders.

Investment Strategy

“Competition in the life insurance market will increase further with the aging population and declining birth rate,” Dai-ichi Life President Katsutoshi Saito said in a document sent to policyholders in July. “We need the listing to make management strategy more flexible and to increase transparency.”

Japanese life insurers, mostly mutual societies owned by policyholders, need to boost returns because they sold policies in the 1980s with projected yields of as much as 6 percent. Dai- ichi in October was projecting returns of 3.1 percent this year.

Kazunori Sato, co-deputy head of the company’s investment planning division, said in October that Dai-ichi Life would hold fast to its present course after increasing investments in overseas bonds with currency hedges in the six months ended Sept. 30. Sato said Dai-ichi Life simultaneously cut holdings of domestic bonds during the first half.

Companies in the Asia-Pacific region made $87.8 billion worth of equity and equity-linked transactions this year, down from $217.7 billion a year earlier and $208.7 billion in 2006, according to data compiled by Bloomberg.

Nomura, Japan’s biggest brokerage, was the top-ranked underwriter for Japanese equity transactions this year while Mizuho ranked 10th, according to Bloomberg data. Merrill ranked fifth in the Asia-Pacific region.

Dai-ichi Life boosted ordinary revenue to 2.22 trillion yen for the six months ended Sept. 30, from 2.17 trillion yen a year earlier.