Tokyo Metro's Stock Listing and the History of Tokyo's Subway

By Naoki Sato

On October 23, 2024, Tokyo Metro, a railway (subway) operator in Japan, was listed on the Tokyo Stock Exchange. Previously, Tokyo Metro's shares were entirely owned by the Japanese government and the Tokyo Metropolitan Government. However, with this listing, 50% of these shares were sold. As of the date of its listing, this was the largest Initial Public Offering (IPO) on the Tokyo Stock Exchange in 2024, attracting significant attention.

In this article, I would like to briefly review the history of the Tokyo’s subway system and describe how Tokyo Metro was listed. In addition, I would like to inform you in advance that this article was written based on the author's research and from the standpoint of a researcher at the Japan International Transport and Tourism Institute, USA.

Overview of Tokyo’s Subway System Today

There are 13 subway lines in Tokyo, mainly in the wards of Tokyo, but they are operated by two railway (subway) operators, "Tokyo Metro" and "Tokyo Metropolitan Bureau of Transportation (TOEI)".

To briefly explain, Tokyo Metro has a network of 180 stations with 9 lines of 195.0 km(121.1miles), of which 7 lines operate directly through each other with other railway companies, covering a distance of 556.6 km (345.8miles) of commercial lines, including mutual direct service destinations. In fiscal 2023, Tokyo Metro carried an average of approximately 6.52 million passengers per day.

TOEI, meanwhile, has a network of 106 stations with 4 lines of 109.0 km(67.7miles), three of which operate directly through each other with other railway companies, covering a distance of 363.3 km(225.7miles) of commercial lines, including mutual direct service destinations. In fiscal 2022, TOEI carried an average of approximately 2.24 million passengers per day. (*As far as the author has been able to ascertain, the most recent fiscal year for TOEI figures was FY2022.)

Tokyo Subway Route Map

（by Tokyo Metro | Subway Map）

The beginning of Tokyo’s subway

The history of Tokyo’s subway system began in 1927 with the opening of Japan’s first subway line, the Ginza Line, which initially operated between Asakusa Station and Ueno Station. The organization responsible for this construction was the predecessor of Tokyo Metro, a company established with private capital. In other words, the first steps in development of Tokyo’s subway system were initiated by a private company.

The construction of a subway system by the private sector alone became difficult due to the recession and other factors, and in 1941 the Teito Rapid Transit Authority was established as a joint public-private investment organization under a law promulgated and enforced in 1938. The purpose of the Teito Rapid Transit Authority was to construct and operate the Tokyo subway system in a unified manner.

View of the ticket gate at the opening of the Tokyo Metro Ginza Line

（by Metro Cultural Foundation）

Participation in the construction of the Tokyo’s subway by TOEI

Although the Teito Rapid Transit Authority started as a public-private venture, private capital was excluded in 1951 in favor of government funding, transforming the organization into one owned by only the national government and the Tokyo Metropolitan Government.

At that time, Japan was experiencing economic growth and population concentration in cities, and there was an urgent need to improve the subway network. Teito Rapid Transit Authority had started construction work on the Marunouchi Line, but in order to cope with the increase in users, it was decided that the Tokyo Metropolitan Government would construct a subway as well. This was the beginning of the TOEI. Then, in 1959, the Marunouchi Line (now operated by Tokyo Metro) was fully opened, and in 1960, the Asakusa Line (operated by TOEI) began service, initially between Oshiage Station and Asakusabashi Station. This marked the start of Tokyo’s subway construction being advanced by two different operators. Furthermore, when the Asakusa Line opened, it became the first Tokyo subway line to engage in through-service operations with a private railway, Keisei Electric Railway.

Ceremonial scene at the opening of the TOEI Asakusa Line

（by TOEI TRANSPORTATION）

Privatization of From Teito Rapid Transit Authority to Tokyo Metro and the Discussion on Unification Tokyo Metro and TOEI

Subway construction continued over the years, and by 2004, when the construction of the subway was largely completed, the Teito Rapid Transit Authority was privatized (incorporated into a corporation), becoming Tokyo Metro Co., Ltd. Even after privatization, shares were held by the national government and the Tokyo Metropolitan Government, but the law called for the prompt sale of shares, that is, complete privatization.

However, there were calls from the Tokyo Metropolitan Government to discuss the unification of Tokyo’s subway operators, taking into account the historical context and convenience for passengers. In 2010, a council was established, composed from members of the national government, the Tokyo Metropolitan Government, and Tokyo Metro, to discuss unification. Thus, discussions on the timing of the stock listing proved difficult.

Amid these debates, a law was passed in 2011 stipulating that the proceeds from the sale of the national government’s Tokyo Metro shares would be allocated to the reconstruction fund for the Great East Japan Earthquake.

The Stock Listing and the Expansion of the Yurakucho Line

There is no doubt that the law for reconstruction after the Great East Japan Earthquake has encouraged the listing, but I believe that there are other factors that have led to its occurrence at this time, with one of these being the expansion of the Yurakucho Line.

One of the key reasons for the privatization of the Teito Rapid Transit Authority was that most new subway construction had been completed, and the focus had shifted primarily to operations. In other words, after the transition to Tokyo Metro, no new large-scale subway line construction was planned.

However, due to strong local demands, the Tokyo Metropolitan Government sought to push forward with the expansion of the Yurakucho Line. Simply put, the Tokyo Metropolitan Government had two desires: to unify subway operators and to extend the Yurakucho Line.

In this context, the national government presented a recommendation in 2021, stating that it would be appropriate for Tokyo Metro to be the primary entity responsible for extending the subway system while the national government and the Tokyo Metropolitan Government would retain half of Tokyo Metro’s shares for the time being. In response, the Tokyo Metropolitan Government decided to proceed with the sale of its Tokyo Metro shares, which had been delayed due to discussions about unification, and also to advance the expansion of the Yurakucho Line.

At last

With Tokyo Metro’s stock listing, the company will undoubtedly attract more attention than ever before. This means that Tokyo Metro will need to be more conscious of its stock price and consider the voices of new shareholders in its management decisions. However, the fundamental role that Tokyo Metro and the TOEI play as subway operators in Tokyo is unlikely to change.

Moving forward, I hope that both operators will continue to achieve high customer satisfaction and persist in developing a sustainable subway system that Tokyo (and Japan) can proudly present to the world.

Reference

Tokyo Metro

https://www.tokyometro.jp/corporate/enterprise/passenger_rail/transportation/lines/index.html

Tokyo Metropolitan Bureau of Transportation

https://www.kotsu.metro.tokyo.jp/about/service/subway.html

Tokyo Subway Corporation Act

https://laws.e-gov.go.jp/law/414AC0000000188

Recommendation of the Council for Transport Policy

https://www.mlit.go.jp/policy/shingikai/content/001414998.pdf