Sony Financial Group Inc. surged in its Tokyo debut on Monday after a rare spinoff-listing by Sony Group Corp.,which is sharpening its focus on its entertainment and image sensor businesses.
The shares opened at ¥205 and rose as high as ¥210 before edging lower and closing at ¥173.8 on their first day of trading. That values the Sony Group’s financial unit at ¥1.2 trillion ($8.1 billion) based on the closing price. The reference price for Sony Group’s financial unit was set at ¥150 last week.
The insurance and banking operator is the first direct listing in the country in more than two decades, and is seen as a test of how companies can improve valuations through spinoffs and listing businesses. This is also in line with the reform push made by the government and the Tokyo stock exchange, with the economic ministry even offering tax breaks to companies to spin off businesses.
A spinoff listing offers a unique option for corporate Japan to reallocate its management resources, said Hiroaki Tomori, executive fund manager at Mitsubishi UFJ Asset Management. The fact that a blue-chip like Sony Group conducted it gives it legitimacy at a time when the Tokyo bourse and investors are asking for better capital efficiencies, he said.
Sony’s move will result in two distinct businesses, which make it easier to examine the businesses and may lead to better pricing multiples. Nomura Securities Co., Goldman Sachs Group Inc. and JPMorgan Chase & Co. are the advisers to the deal.
“This transaction makes a ton of sense. Said simply, there is no reason that a company that makes movies, video game consoles, produces music and semiconductors should be in the financial services business,” Richard Howe, founder of research firm Stock Spin-off Investing, said in a note on Smartkarma. “I would love it if this spinoff was just the first step for Sony to transition from a conglomerate to many pure play publicly listed companies.”
The stock may face technical selling pressure though as the company complies with the Nikkei 225 index’s new methodology under which a spun-off company will be excluded from the index calculation on the next business day after the listing date. This could see passive funds selling 125 million shares, according to an estimate by analyst Junichi Hashimoto at Daiwa Securities Co.
Moreover, the entity’s life insurer unit is vulnerable to rising interest rates as it has large holdings of super-long Japanese government bonds, which in turn will have a bearing on its stock price, according to Masao Muraki, an analyst at SMBC Nikko Securities Inc.
Stock Spin-off Investing’s Howe expects “indiscriminate selling” and thinks Sony Financial Group would be an attractive buy at ¥111 or lower.
One thing Sony Financial has going for it is that the insurance and banking units have strong top-line growth, and that should bring a premium to the shares, said SMBC Nikko’s Muraki. The company estimates ¥82 billion of net income in the current fiscal year ending March 31, up 4.1% on year, according to a release.
“The financial group not only has a decent amount of sales and efficiencies across its insurance and banking arms, but will also continue to tap into parent Sony Group’s broader ecosystem,” Steven Lam, analyst at Bloomberg Intelligence, wrote in a note. Lam estimates that the market value of the stock may go as high as ¥1.9 trillion.
Photograph: Signage for Sony Group Corp. outside the company’s headquarters in Tokyo, Japan, on Wednesday, May 14, 2025. Photo credit: Kiyoshi Ota/Bloomberg
Copyright 2025 Bloomberg.
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