Tokio Marine Holdings has announced plans to split each share into 15 shares. The split will substantially reduce the minimum investment required, with the company aiming to broaden participation by retail investors and build a base of long-term shareholders.
Tokio Marine Holdings is reportedly set to carry out a stock split effective 1 October, increasing each share to 15 shares. After the split, the share price will theoretically decline by a factor corresponding to the split ratio. Investors will hold more shares, but the company’s overall market capitalization and earnings will not increase.
The purpose of the split is to lower the barrier to investment and encourage more retail investors to participate. The company is also seeking to enable greater portfolio diversification by reducing the minimum investment required and to improve trading liquidity. The spread of the new NISA is another factor behind the move, and some observers believe that retail investment is becoming more influential.
Against the backdrop of the spread of the new NISA and progress on reforms promoting small-amount investment, stock splits are also becoming more common among other large-cap stocks. Examples include NTT’s 25-for-1 split and 10-for-1 splits by Mitsubishi Heavy Industries and Fujitsu. Analysts believe the growth in retail investors could also affect companies’ shareholder bases.
The Tokyo Stock Exchange is likewise encouraging lower investment units. As efforts to promote an investment unit of less than ¥500,000 gather pace, surveys have reportedly found that individual investors would ideally prefer an investment of around ¥100,000.