Japan is putting a crown jewel of its once-robust blue model system on the auction block. The Wall Street Journal reports:
The Tokyo Stock Exchange said Japan Post Holdings and units Japan Post Bank Co. and Japan Post Insurance Co. are all scheduled to list Nov. 4. Japan Post Holdings aims to raise about ¥1.4 trillion from the simultaneous listings, based on the indicative prices.
That would be the biggest IPO since telecommunications provider NTT Docomo Inc.went public in 1998, raising ¥2.1 trillion, and the largest sale of a government-owned company since Nippon Telegraph & Telephone Corp. raised ¥2.4 billion in 1987.
This immense titan of everything blue—jobs for life, state-directed savings and investment, subsidized postal service, crony contracts with favored suppliers—has been a drain on the country’s economy for years. Privatizing it should have happened decades ago; it is a white elephant that today’s Japan cannot afford to feed.
However, the smart money wants nothing to do with what looks like an overvalued, badly managed, and politically constrained sink hole. For privatization to work, the government would have to give the new management permission to do unspeakable things, like putting profit ahead of politics. So the Japanese government is going to try to trick unsophisticated investors into buying 90 percent of the shares. The problem is that millions of new share owners will be furious unless their investments do well.
The stake that owners will now have in the company’s performance means that one can see this either as a bungled privatization or as a clever plan to create strong public support for the much deeper changes that will need to be make for the new company to work. As with so many of Abe’s moves, only time will tell whether this is genius or delusion. But it is inescapably clear that Japan, which rode the blue model to unprecedented affluence and success, understands that the old system doesn’t work any more and that things have to change.