Nomura excluded from $6 billion Japan Tobacco share sale

Japan has excluded Nomura Holdings from working on the government's sale of roughly $6 billion worth of Japan Tobacco shares, in a blow to Japan's largest broker as it grapples with an insider trading scandal. The Ministry of Finance said in a statement on Monday it had chosen JPMorgan Chase & Co , Daiwa Securities , Goldman Sachs and Mizuho Securities as underwriters for the share sale by the world's third-largest cigarette company.

 But it was the absence of Nomura, which dominates Japan's underwriting market with an unrivaled network of retail clients across the country, that caught the market's attention. "This is the sort of deal that one would have expected Nomura to be a shoe-in for," said Makarim Salman, head of Japan financials research at Jefferies in Tokyo. "Investors will start to worry whether there will be other such announcements on the horizon, particularly with Japan Airlines' IPO coming up."

 The decision came after Nomura earlier this month acknowledged for the first time that its employees had leaked confidential information on three separate public share offerings in 2010, confirming the findings of regulators, which have been probing the matter for months. The finance ministry is planning to cut the government's stake in Japan Tobacco to one-third from half to raise money to help fund reconstruction efforts in areas devastated by last year's earthquake and tsunami.

 The deal will easily rank as one of the largest equity offerings in Japan this year and was actively sought by banks eager to gain a track record with the government, even though the fees are expected to be relatively small.