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TOKYO, June 5 (Reuters) - Nomura Holdings, under investigation for insider trading, is among four Japanese and five foreign brokerages shortlisted to underwrite a government sale of shares in Japan Tobacco, which could raise around $6 billion, the Finance Ministry said.
The ministry, which owns half of Japan Tobacco, is selecting underwriters to manage what could be one of Japan’s largest share sales in recent years, but the run-up to the offering in the world’s third-largest cigarette company has been muddied by the widening insider trading probe.
Nomura, Japan’s largest brokerage and a key player in past state-owned share sales, could be ruled out as an underwriter for the offering if the probe results in penalties against it, officials have told Reuters.
Nomura has previously declined comment on the Japan Tobacco share sale and whether its business might be affected by the investigation.
The shortlist also includes Daiwa Securities, SMBC Nikko Securities, Mizuho Securities, JPMorgan Chase & Co , Goldman Sachs, Morgan Stanley MUFG, UBS AG and Merrill Lynch, according to a statement on the ministry’s website. Twelve investment banks had applied to work on the share sale, five of them Japanese, according to the statement.
Citigroup, which has also taken part in several of Japan’s government share sales, has teamed up this time with SMBC Nikko, while Morgan Stanley has put itself forward via its local joint venture Morgan Stanley MUFG.
The ministry plans to cut its stake in Japan Tobacco to one-third to raise money to help fund reconstruction efforts in areas devastated by last year’s earthquake and tsunami. It is set to sell 1.66 million shares - which would be worth around 705 billion yen ($9 billion) based on Tuesday’s close.
Japan Tobacco has said it would buy back about 250 billion yen worth of shares if the sale takes place before next March - leaving close to $6 billion for the government’s reconstruction effort.
$1 = 78.2800 Japanese yen Reporting by Takaya Yamaguchi and Junko Fujita; Editing by Michael Watson and Ian Geoghegan