Toyota Motor Corp. the largest company in Japan and the biggest automaker in the world, has decided to set at the high end of the spectrum the price for its new “Model AA” class shares.
Japanese retail investors, the only ones allowed participating in the buying process, rushed to snatch shares in the $4 billion issue, ensuring great success to the automaker’s strategy of securing new, longer-term shareholders. Toyota has established the issue’s price would be of 10,598 yen ($85.8) each, way over the 8,153 yen close of its regular stock in Tokyo on Thursday and topping the envisioned 26 to 30 percent premium it had targeted for the new class of shares. Nomura Securities has been tasked to exclusively underwrite the issue, which has 47.1 million shares and will yield 499.2 billion yen for Toyota. The stock acts more like a convertible bond and has a dividend of 0.5 percent during the first year, while for the five-year period it will gradually rise to 2.5 percent – but even the low end of the dividend is more than ten times the yield of a regular time deposit on government bond in Japan.
The new Model AA shares, named after the company’s first passenger car, will not be listed but have voting rights – investors are compelled to hold the stock they bought for half a decade and they can convert them to common shares or ask Toyota to repurchase them at the asking price. The issue has been criticized by international funds as they are only available in Japan.