Sony may pursue a partial divisional spin-off by listing its finance arm within the next two to three years.
Sony Group Corporation It is reportedly considering a partial spin-off and listing of its finance arm three years after assuming full ownership. The Japanese multinational conglomerate may hold a little less than 20% stake of Sony Financial Group. In addition to the potential spin-off, Sony is also focusing on other operational plans, including strengthening its entertainment and image sensor businesses.
Shares of the Tokyo-based company rose 6% on positive investor reception of the operational development.
Sony CFO comments on finance unit listing plans
In a strategy meeting, Sony’s chief financial officer Hiroaki Totoki spoke on the need to separate the finance unit with a partial listing. According to Totoki, sufficient capital is needed to maintain the financial arm of the company, including life insurance and banking. “Balancing this with our investments in other growth areas such as entertainment and image sensors is a challenge,” he added.
Totoki also pointed out that Sony will implement a government scheme that allows companies to divest their units without the additional tax burden. Also, the company may acquire a partial spin-off of ‘Finance’ but still see that the Sony branding is retained in the new listing. As it stands, Sony seeks a good balance within all of its business divisions.
On public perception of Sony after the listing, which could take two to three years, Lightstream Research analyst Mio Kato Said,
“It doesn’t change anything major in terms of outlook for Sony, but it does make it a more pure play entertainment company that the market generally prefers.”
Sony’s finance unit sustained a 5% revenue decline in the first quarter of the year to 1.45 trillion yen ($10.74 billion). However, operating profit rose 49% to 223.9 billion yen from a one-time gain in the sale of fixed assets.
Sony spent $3.7 billion three years ago to completely buy out its financial unit. The move came despite some outside pressure from activist investors to focus on entertainment. However, over the past five years, the PlayStation maker has expanded its entertainment portfolio with several major acquisitions. These include buying EMI Music Publishing for $2.3 billion and Crunchyroll for $1.2 billion. Crunchyroll is an anime streaming service previously owned by the American telco giant AT&T (NYSE: T).
sony entertainment
Amidst its entertainment-driven agenda, Sony previously said it expected to sell 25 million PlayStation consoles in 2023. Owing to supply chain constraints, the Japanese corporation is expected to achieve this record target in the financial year. Despite predicting a decline in first-party software sales for 2023, Sony is expected to release several notable titles this year. This includes a sequel to its exclusive Marvel “Spider-Man” game.
MST financial analyst David Gibson explained Sony’s plans to increase investment in entertainment. He said the proceeds from listing Sony Financial could help fund the group’s “aggressive merger and acquisition” activities. “Consolidation is happening in entertainment, and Sony doesn’t want to be left behind,” Gibson said.
Meanwhile, Macquarie analyst Damien Thong described Sony’s latest operational decision as a brilliantly opportunistic move.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to strip crypto stories down to the basics so that anyone anywhere can understand without a lot of background knowledge. When he is not delving deep into crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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