Transcript
Josh Weismer: Welcome to another episode of the Mizuho Markets Mindset. I'm here with my colleague, Rich Soto, today to talk about the Japanese retail process and its applicability to IPOs.
What exactly is a POWL listing and how is it applicable with Japanese retail?
Richard Soto: Yeah. Great, Josh. So Japanese POWL, or public offering without listing, is a listing alternative in Japan that allows U.S. IPO issuers to target Japanese retail and institutional demand without actually formally having a listing in Tokyo, but being able to access both ultra-high-net-worth and traditional retail in Japanese markets.
We hadn't seen these come up for the last 20 years, but recent changes allowed Japanese investors to target U.S. offerings. We've now seen two happen this year, and we expect many more to come.
Maybe Josh, do you want to talk a little bit about what changes have led to these new POWLs coming out?
Josh Weismer: Sure. I think really the Japanese retail market over the last couple of years has evolved considerably. Historically, there's about $15 trillion of Japanese household wealth, and only 14% of that has been invested in equities. About half of that has been sitting in cash.
And several years back, and really a change made in 2024 by the Japanese regulatory authority, allowed what's called a NISA account, which is based on a similar account system in the UK, which effectively allows Japanese investors to invest just north of $100,000 and have their capital gains be deferred indefinitely.
The capital gains rate in Japan for individuals is just north of 20%, and this allows them to not have to pay capital gains for the foreseeable future. And given that there’s $15 trillion of Japanese household wealth, every 1% increase represents about $150 billion of incremental buying power across global equities.
So being able to take that incremental demand from Japanese retail and apply it into these big U.S. IPOs is really attractive.
And that really has increased the appetite for equities, not just in Japan, but on a more global basis.
And we're really excited about the opportunity to tap this network of wealth and investors who historically just have not participated as heavily in the equities market.
So Rich, do you want to talk a little bit about the POWL process and what it entails?
Richard Soto: Yeah. Look, Josh, we have it down to a science. It's about a three-month process with the Japanese regulator. The SRS document that gets put together is essentially a translation of the S-1. We don't have to go through an extensive list of demands from the Japanese regulators. I think the one constraint is that you will have to, as an issuer, put together all of your 10-Qs, 10-K equivalents with the Japanese regulator for a period of five years.
Josh Weismer: Rich, you talked about the two transactions that Mizuho has executed in 2026. Maybe walk through each of those deals and what was unique about those, and talk about some of the metrics that were really interesting coming out of both of those transactions.
Richard Soto: So, Josh, Mizuho has been the only bank to do POWLs in the last 20 years for U.S. offerings. So first we did the PayPay IPO in March/April of this year. That transaction ended up being about 15% of the total allocations were to the Japanese POWL.
So about a billion dollar IPO, $150 million or so of Japanese POWL demand allocated. In SpaceX, largest IPO of all time, $2.2 billion were allocated to Japan, about 3% of the base offering. I think more importantly than that, it's very high-quality retail.
So unlike some of the traditional retail, sort of thinking around retail is that they tend to flip. We have all the stats around the trading. Only about 22% of the Japanese POWL has traded through the first three days of SpaceX, just to give you an idea, which just signifies it's not like most retail that you see around the world.
It's very high-quality, ultra-high-net-worth focused retail that we're seeing out of Japan. I think as we see more and more scaled IPOs, and obviously there's a lot of rumors out there about big deals coming in over the next year, we expect more POWLs to happen. I think Japanese investors are becoming more and more familiar and used to investing in U.S. IPOs.
So Josh, what do you see for the future of the POWL for these deals? Who is the right issuer to potentially target doing a POWL to Mizuho?
Josh Weismer: Sure, Rich. I think one of the things that we're seeing is as companies stay private for longer, the average IPO size is increasing considerably. We've seen more than 15 IPOs this year that are a billion dollars or more in value.
We're seeing many deals that are $2 billion or more. And if you look at the pipeline through the end of the year, including some of those big transactions that have been rumored that you mentioned earlier, there's probably another dozen or so $2 billion or more transactions.
And as companies think about attracting investors on a global basis because they're raising such large quantums of capital, I think that this has incredible applicability.
Again, earlier I mentioned the amount of Japanese household wealth that's sitting in cash right now and their appetite to invest in global equities.
So we think this has incredible applicability as we move forward and see a lot more jumbo IPOs and the definition of jumbo IPOs in the U.S. changes as these larger companies access the U.S. markets.
So thanks again for joining us today.
If you are interested in accessing the Japanese retail market as part of a jumbo IPO, please reach out to the Mizuho Equity Capital Markets team, given our unique exposure and experience with the product.
Transcript
Josh Weismer: Welcome to another episode of the Mizuho Markets Mindset. I'm here with my colleague, Rich Soto, today to talk about the Japanese retail process and its applicability to IPOs.
What exactly is a POWL listing and how is it applicable with Japanese retail?
Richard Soto: Yeah. Great, Josh. So Japanese POWL, or public offering without listing, is a listing alternative in Japan that allows U.S. IPO issuers to target Japanese retail and institutional demand without actually formally having a listing in Tokyo, but being able to access both ultra-high-net-worth and traditional retail in Japanese markets.
We hadn't seen these come up for the last 20 years, but recent changes allowed Japanese investors to target U.S. offerings. We've now seen two happen this year, and we expect many more to come.
Maybe Josh, do you want to talk a little bit about what changes have led to these new POWLs coming out?
Josh Weismer: Sure. I think really the Japanese retail market over the last couple of years has evolved considerably. Historically, there's about $15 trillion of Japanese household wealth, and only 14% of that has been invested in equities. About half of that has been sitting in cash.
And several years back, and really a change made in 2024 by the Japanese regulatory authority, allowed what's called a NISA account, which is based on a similar account system in the UK, which effectively allows Japanese investors to invest just north of $100,000 and have their capital gains be deferred indefinitely.
The capital gains rate in Japan for individuals is just north of 20%, and this allows them to not have to pay capital gains for the foreseeable future. And given that there’s $15 trillion of Japanese household wealth, every 1% increase represents about $150 billion of incremental buying power across global equities.
So being able to take that incremental demand from Japanese retail and apply it into these big U.S. IPOs is really attractive.
And that really has increased the appetite for equities, not just in Japan, but on a more global basis.
And we're really excited about the opportunity to tap this network of wealth and investors who historically just have not participated as heavily in the equities market.
So Rich, do you want to talk a little bit about the POWL process and what it entails?
Richard Soto: Yeah. Look, Josh, we have it down to a science. It's about a three-month process with the Japanese regulator. The SRS document that gets put together is essentially a translation of the S-1. We don't have to go through an extensive list of demands from the Japanese regulators. I think the one constraint is that you will have to, as an issuer, put together all of your 10-Qs, 10-K equivalents with the Japanese regulator for a period of five years.
Josh Weismer: Rich, you talked about the two transactions that Mizuho has executed in 2026. Maybe walk through each of those deals and what was unique about those, and talk about some of the metrics that were really interesting coming out of both of those transactions.
Richard Soto: So, Josh, Mizuho has been the only bank to do POWLs in the last 20 years for U.S. offerings. So first we did the PayPay IPO in March/April of this year. That transaction ended up being about 15% of the total allocations were to the Japanese POWL.
So about a billion dollar IPO, $150 million or so of Japanese POWL demand allocated. In SpaceX, largest IPO of all time, $2.2 billion were allocated to Japan, about 3% of the base offering. I think more importantly than that, it's very high-quality retail.
So unlike some of the traditional retail, sort of thinking around retail is that they tend to flip. We have all the stats around the trading. Only about 22% of the Japanese POWL has traded through the first three days of SpaceX, just to give you an idea, which just signifies it's not like most retail that you see around the world.
It's very high-quality, ultra-high-net-worth focused retail that we're seeing out of Japan. I think as we see more and more scaled IPOs, and obviously there's a lot of rumors out there about big deals coming in over the next year, we expect more POWLs to happen. I think Japanese investors are becoming more and more familiar and used to investing in U.S. IPOs.
So Josh, what do you see for the future of the POWL for these deals? Who is the right issuer to potentially target doing a POWL to Mizuho?
Josh Weismer: Sure, Rich. I think one of the things that we're seeing is as companies stay private for longer, the average IPO size is increasing considerably. We've seen more than 15 IPOs this year that are a billion dollars or more in value.
We're seeing many deals that are $2 billion or more. And if you look at the pipeline through the end of the year, including some of those big transactions that have been rumored that you mentioned earlier, there's probably another dozen or so $2 billion or more transactions.
And as companies think about attracting investors on a global basis because they're raising such large quantums of capital, I think that this has incredible applicability.
Again, earlier I mentioned the amount of Japanese household wealth that's sitting in cash right now and their appetite to invest in global equities.
So we think this has incredible applicability as we move forward and see a lot more jumbo IPOs and the definition of jumbo IPOs in the U.S. changes as these larger companies access the U.S. markets.
So thanks again for joining us today.
If you are interested in accessing the Japanese retail market as part of a jumbo IPO, please reach out to the Mizuho Equity Capital Markets team, given our unique exposure and experience with the product.
U.S. issuers are increasingly looking at the opportunities that exist in Japanese retail and institutional investment. This trend is highlighted in the SpaceX IPO, the largest in history, which raised $2.2 billion from Japan, representing the largest retail allocation to any country outside of the U.S.
In our latest episode of Markets Mindset, Mizuho’s Head of Equity Capital Markets, Josh Weismer, sits down with Managing Director of Equity Capital Markets, Richard Soto, to discuss the Japanese POWL structure and what makes it an attractive prospect for U.S. issuers.
Our experts explore the role of Japanese investment in the future of equity capital markets, touching on how the POWL played an important role in two of Mizuho’s recent deals.
Some key questions addressed in the episode include:
What is the Public Offering Without Listing (POWL) structure?
A POWL is a unique regulatory and financing structure primarily used in Japanese equity capital markets. It allows companies issuing equity in the U.S. to make an offering directly to Japanese retail and institutional investors without having to list those securities on a domestic Japanese stock exchange.
What are the Japanese regulatory changes impacting individual participation in IPO investing?
While historically only 14% of total Japanese household wealth has been invested in equities, the Japanese regulatory authority introduced new changes in 2024 allowing investors to avoid paying capital gains on equities for the foreseeable future.
How is use of the POWL beneficial to issuers, for example, in the case of the SpaceX IPO?
Offerings that incorporate a POWL mechanism, like the SpaceX IPO, can offer issuers direct access to Japan’s massive retail liquidity, in line with timing of the U.S. offer.
Josh and Rich discuss why this can benefit issuers looking to capitalize on the buying power of high-quality, ultra-high-net-worth Japanese retail investors.
What is driving increased demand for IPOs among Japanese retail investors?
The relative domestic IPO drought in Japan, combined with over $15 trillion in untapped cash assets have made high-profile foreign IPOs like SpaceX highly attractive.
Our experts expect more jumbo IPOs in the future, availing themselves of this structure.
Get answers to these questions and more in this episode of Markets Mindset.
