Kawasaki Heavy Industries Gears Up for Major Capital Raising

Japan's Kawasaki Heavy Industries plans to raise $1.23 billion through new shares and convertible bonds to fund capital expenditure. The initiative aims to enhance key sectors such as aircraft engines and hydrogen supply in light of rising defence needs. Convertible bonds are gaining popularity as interest rates rise.

Kawasaki Heavy Industries in Japan is on the verge of raising approximately 200 billion yen ($1.23 billion) through the issuance of new shares and convertible bonds, according to insider sources.

The decision is anticipated imminently, with sales primarily targeting overseas institutional investors. Though no formal announcement has been made, the company's stock dipped 7% over dilution concerns. The raised funds will bolster its investments in crucial sectors including aircraft engines and hydrogen supply, coinciding with the government's strategic sector and defence enhancements.

As interest rates climb, convertible bonds, which avoid immediate shareholder dilution, are increasingly favored, with Japanese firms raising nearly $7 billion by mid-June 2023. Kawasaki Heavy's CEO sees opportunities in Prime Minister Sanae Takaichi's strategic investment targets. The company, a major player in defense manufacturing, is expanding collaborations with tech giants like Nvidia and has joined Airbus on drone development. It anticipates record profits amid rising military spending and regional tensions.