Daiwa House Industry Co. planned to raise about JPY137.9 billion equivalent to US$1.37 billion. This year, Japan's largest homebuilder would hold the record for Asia's biggest stock sale by a property business.
The profits would increase to as much as JPY650 billion. The Osaka-headquartered company would spend the earnings over the next three years. It would invest on building or redevelopments as well as warehouses, alliances, acquisitions and capital spending. The statement came from the company through Tokyo Stock Exchange.
Japan's construction industry was making progress after the March 2011 earthquake. The recovery was also supported by the state's pledge to spend JPY3.8 trillion for reconstruction and disaster prevention. The initial budget allotted for the industry's revival was JPY19 trillion.
"The company will be able to curb a rise in debt, given the proceeds from the public offering, ample cash flow and expected recoveries from property sales," a Tokyo-based credit analyst at Rating & Investment Information Inc., Hirohide Kinoshita, said in a note after the company publicized the sale. "Because of strong appetite for business expansion, however, improvement in the balance between risk assets or debt and equity capital may stall."
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