Middle East Conflict Impacts IPO Pricing: SoftBank's PayPay Faces Potential Bottom-Price Offering in US Listing

According to information obtained by Zhitong Finance, and as revealed by two insiders, due to market turbulence triggered by the war in the Middle East, the initial public offering (IPO) pricing of SoftBank Group's payment company PayPay (PAYP.US) may be set at the low end of the range.

One of the sources stated that PayPay's IPO order book was oversubscribed more than five times and is now closed, with final pricing to be determined after the close of the US stock market on Wednesday.

According to documents submitted this month, the Japanese payment app operator is offering a total of 55 million American Depositary Shares in this IPO, with a price range of $17 to $20 per share and a targeted valuation of up to $13.4 billion.

One of the sources noted that Tencent, Ant Group’s Alipay, and Google have committed to participating in this IPO investment. None of these companies responded to requests for comment.

PayPay has played a central role in encouraging Japanese consumers to move away from cash preferences by offering cashback incentives through its payment app. Its registered users now exceed 70 million.

However, the company's path to IPO has not been smooth. According to reports last week, PayPay's IPO roadshow was initially delayed due to the Middle East conflict impacting the market. Previously, during last year’s US government shutdown, PayPay had also postponed its IPO because the regulatory process was interrupted leading to document submission delays.

Despite recent market volatility, the US IPO market is expected to rebound significantly this year. Goldman Sachs forecasts that IPO fundraising could quadruple by 2026, reaching a record $160 billion, with potential listings including Elon Musk’s SpaceX, as well as artificial intelligence companies OpenAI and Anthropic.

PayPay will become the first US listing under SoftBank's majority equity investments since the high-profile IPO of Arm. SoftBank listed this chip design company in 2023 at a valuation of $54.5 billion, which has since risen to nearly $130 billion.

PayPay plans to list on Nasdaq under the ticker symbol "PAYP". Goldman Sachs, JP Morgan, Mizuho Bank, and Morgan Stanley are the joint bookrunners for this offering.