JAL offering priced at top of the range Japan Airlines" Y663bn ($8.5bn) initial public offering was priced at the top end of the range on Monday, underscoring strong demand for shares in the second-biggest IPO this year after Facebook. JAL's IPO price was set at Y3,790 a share after bookbuilding indicated that demand for the shares had "sufficiently exceeded the number of shares to be offered," JAL said. The range had been set at Y3,500-Y3,790 previously. IN Airlines The airline is relisting on the Tokyo Stock Exchange after filing for bankruptcy less than three years ago, marking one of the most successful corporate turnrounds in Japan in recent years. JAL's relisting, which will consist of the entire 175m shares in JAL held by the Enterprise Turnaround Initiative Corp, will bring the government-backed fund a substantial return on the Y350bn it invested in JAL in 2010. JAL will surpass ANA as Japan's largest airline and will become the world's fourth-largest airline by market capitalisation. The main factor behind the strong demand for JAL shares is the low price, which is about five times forecast earnings, compared with an industry average of about 8 to 9 times, and 13 times for Japanese rival, ANA, analysts said. Towards the end of the bookbuilding process, brokers were reporting 2.5 times to 3 times demand, said one analyst. Japanese investors will receive 75 per cent of the shares, with the bulk of that going to retail investors, while foreign institutions will be allocated the remaining 25 per cent. The success of JAL's listing will have a significant impact on other IPOs in the pipeline, such as the listing of Seibu Holdings, the railway to hotels group, which is expected to relist later this year, after being delisted due to a corporate scandal. "Seibu will also look to tap demand from individual investors, so whether JAL's first price on listing falls below its IPO price or not will have a big impact on Seibu's listing," said Takashi Nishibori, editor of Tokyo IPO, a website specialising in IPOs. In the short term JAL is likely to be able to support its share price due to its ability to generate profits and demand from investors who did not buy in the IPO, he said. JAL's mid to long-term outlook is uncertain, however, due to intensifying competition from low-cost carriers, the weak global outlook and less scope for cost-cutting, according to Ryota Himeno, analyst at Barclays in Tokyo. What is more, JAL will face political pressure, which could raise costs. The airline was allowed to cut underperforming routes because it of its bankruptcy but now that it has generated record profits, it will no longer be able to enjoy such special treatment, said Mr Nishibori. That outlook is reflected in the low IPO price, because, "looking 2 to 3 years ahead, JAL may not look that cheap," he says.