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Japan’s Kansai Electric Power Co. slumped after the company said it plans to raise as much as ¥504.9 billion ($3.2 billion) from a share sale, fueling concern about dilution of existing stock value.
Author of the article:
Bloomberg News
Aya Wagatsuma and Haruka Iwai
Published Nov 14, 2024 • 1 minute read
(Bloomberg) — Japan’s Kansai Electric Power Co. slumped after the company said it plans to raise as much as ¥504.9 billion ($3.2 billion) from a share sale, fueling concern about dilution of existing stock value.
Kansai Electric shares are down 18%, headed for their biggest drop since 1974, when Bloomberg data is available. A gauge of power companies had the biggest decline in the Topix Index amid worries they may follow suit, losing more than 5% while the broader measure gained.
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“It may be that other power companies will also start to move towards public stock offerings, and this may be connected to the idea of a price fall,” said Kazuhiro Sasaki, head of research at Phillip Securities Japan Ltd.
Kansai Electric will sell about 148.3 million new shares as well as 45.7 million treasury shares to the public, according to a filing to Japan’s finance ministry on Wednesday. The funds raised will go toward improving power generation efficiency and decarbonization, as well as investments into businesses including data center, real estate and renewable energy.
Frequent issuers such as utilities are seeing funding costs rise, with Chugoku Electric Power Co. and Tohoku Electric Power Co. paying wider spreads to sell yen bonds. Yields have been rising in Japan as the central bank raised interest rates twice this year and speculation grows that it will increase rates again in months ahead.
The Topix’s electric power & gas sector index has gained about 6% this year, compared with the broader Topix index which is up 15%.
(Updates with analyst commentary)
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