Full privatisation and the TSE listing — letting go of the state’s backing after 52 years (2004)

What it means to lose your backing

The core of this decision lies in a state company that had received regulation and support together choosing to give up both and stand on its own judgement. The certain backing of the government and the nine utilities was a source of stability and, at the same time, a frame that bound managerial freedom. Through the listing J-Power took ¥375 billion from the market and welcomed investors from around the world, including foreign shareholders, as owners; in exchange it accepted a position in which it could no longer run to the government in trouble. In the phrase President Nakagaki repeated — “standing alone, walking alone” — one can see anxiety at the loss of support and elation at being able to decide for oneself, living side by side.

Privatisation did not, however, amount to the completion of liberalisation. Most of J-Power’s generating capacity remained tied to bilateral contracts with the utilities, and the room to direct it to the market was limited. Whether a wholesale power specialist could go on being “the star of privatisation” depended on whether it could grow earnings pillars overseas and in new businesses while preserving the relationship with its largest customer, those same utilities. How a company that has removed the state’s backing defines its own place between regulation and the market — that question is answered not in a single day of listing but in the accumulation of the management that follows.