Sony Financial Unit to IPO

Sony Corp. stands to raise about %30 billion (US$255 million) this week from an initial public offering of its financial services unit.

A total of 725,000 shares in Sony Financial Holdings Inc. will be offered in the IPO with an option to sell an additional 70,000 shares depending on demand.

Sony plans to invest half of the proceeds in a joint venture it has formed with major European insurance company Aegon BV. The venture will operate in Japan and should begin business sometime in 2008. The other half of the money will be invested in computer systems within the financial services group.

While Sony is best known for its consumer electronics products, cell phones, music and movie production and computer gaming businesses many people outside of Japan don't realize is that the Tokyo-based company has a sizable financial services business.

Sony Financial has three main branches to its business: a life insurance company that's active in Japan and the Philippines; a non-life insurance business and Sony Bank, which handles both banking and, from Oct. 1 this year, online trading of securities.

The financial business has enjoyed the highest operating-profit margin of any of Sony's businesses since 2005. In the last fiscal year that margin was 13 percent -- way ahead of the 4 percent at the movies business and 3 percent in its electronics sector. It contributed sales of %649 billion to Sony's total %8.3 trillion sales for the year and operating profit was %84 billion, although losses at other divisions meant Sony reported an overall operating profit of %72 billion.