Raising Finance

As Japan's Nikkei 225 hits 18-year high, Sony unveils fundraising plan

2 min read

30 June 2015

Shares in Japanese electronics giant Sony have fallen more than eight per cent after it announced plans to raise money in a sale of shares and convertible bonds.

In February 2015, Sony announced a spin-off of its video and audio business in an attempt to return to long-term profit. At the time, it wanted to achieve an operating profit of £2.60bn by March 2018.

To further drive growth, Sony has outlined plans to raise £2.29bn via a public share issuance. This will be its first share issuance since 1989, and comes as Japan’s Nikkei 225 is at an 18-year high.

According to Dealogic, Japanese companies have raised £5.85bn via 52 new share offerings so far this year.

The offering is expected to dilute existing shareholders by 9.8 per cent, combined with the convertible bonds. 

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“The purpose of this fundraising is to secure funds to invest in growth and to strengthen Sony’s financial base,” the company said, adding that it was shifting from a phase of restructuring to a focus on longer-term growth.

Sony plans to boost its output of camera sensors used in the iPhone 6, the Samsung Electronics’ Galaxy S6 and Chinese handset maker Xiaomi’s Mi4 handset. Sales of image sensors are expected to increase by 22 per cent.

Sony is also investing in content, hardware and networks for its gaming business.

It expects a return to profit in the financial year through March 2016 for the first time in three years. It booked a loss of £6m in the previous fiscal year as its smartphone business came under pressure from Chinese rivals.

“This looks like the first step towards shifting from being on the defensive to offensive,” said Naoki Fujiwara, fund manager at Shinkin Asset Management.

“The fact that it can turn to the equity market to raise money is a signal of how far its turnround has come,” Fujiwara said.