Sony to list financial spinoff arm at $1 on Tokyo exchange

Sony Group set the share price of its financial services spinoff at ¥150 (about $1) each, and the company will list the unit on the Tokyo Stock Exchange Prime Market on September 29. Nomura Securities set this reference price as a guide for trading, but it does not show the Japanese tech and entertainment firm’s full value or market worth.

The Tokyo Stock Exchange confirmed that Sony Financial Group Inc. will debut as a partial spinoff, with Sony giving more than 80% of the shares to its investors and keeping just under 20%. This will be the first partial spinoff in Japan and could guide how other companies reshape their businesses in the future.

Sony spins off finance arm to strengthen core business

Sony is spinning off its financial business to focus on making games, music, movies, and electronics. Although the financial side brought steady profits, it requires a lot of money and functions under strict government policies. 

The company always had to manage two different businesses simultaneously because games, music, and movies need quick decisions and new ideas, while banking and insurance require slow, careful planning. This spinoff will help investors understand the company better and reduce its workload.

The new company, SFGI, will be a separate business that runs banking, life insurance, and non-life insurance services. SFGI will be able to decide where to spend money, what new products to offer, or which companies to buy to grow bigger on its own once it becomes independent. This way, investors can see it as only a financial company instead of just one small part of a big entertainment and electronics group.

The separation also gives investors more choice because some only want to invest in Sony’s gaming, music, and movies, while others prefer the financial side, and some want to hold both shares. 

Investors receive new shares and face trading swings

Sony will give its current investors new shares of Sony Financial Group Inc. through a dividend in kind. Instead of cash, investors get shares in the new company. The company will decide who qualifies for the new shares on September 30.

Experts say spinoffs like this come with price swings because investors need time to understand the value of two separate companies instead of one big group. Sony’s stock will likely drop after the spinoff because the financial business will not be part of it. In theory, combining the prices of Sony and SFGI will equal the same value that Sony had before the spinoff. 

However, the real-life market is unpredictable, and prices can change quickly. Some investors may sell their SFGI shares immediately if they only want to hold SFGI’s Sony entertainment and electronics business, while others may keep both shares. Large investment funds that follow certain stock indexes may also sell SFGI if the new company is not part of their benchmarks. This automatic selling could lower prices even if nothing is wrong with the business.

Investors must also consider taxes, but Japanese investors won’t face extra taxes when they first receive the SFGI shares because the deal avoids any immediate tax burden. However, they will pay normal capital gains taxes on the profits if they decide to sell either Sony or SFGI shares.

Sign up to Bybit and start trading with $30,050 in welcome gifts