Rakuten Bank IPO: Everything you need to know about Rakuten Bank

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By :  ,  Financial Writer

Rakuten Bank IPO: What do we know about the Rakuten IPO?

Rakuten Bank is set to list on the Tokyo Stock Exchange on Friday, April 21, 2023. The IPO date was announced on March 22, almost one year after Rakuten Group Inc first announced an intention to take the fintech company public.

The previous IPO announcement in May 2022 listed Daiwa Bank and Goldman Sachs as underwriters. However, the deal was delayed amid a souring environment for global tech stocks and Asian tech companies specifically.

Rakuten Group plans to sell 53.95 million shares of Rakuten Bank Ltd to both domestic and international investors along with 5.55 million newly issued shares. In total these shares will represent about 36% of the company. The debut is expected to be the largest IPO in Japan since SoftBank went public in 2018 in a massive $21 billion IPO.

Parent company Rakuten Group went public in 2000 at 4,300 yen per share. As of March 23, the company trades at 638 yen per share.

Explore other upcoming IPOs to watch.

How to trade Rakuten shares

Once Rakuten Bank has been listed, you’ll be able to trade its shares in the same way as any other stock on the market.

In the meantime, you can trade shares with City Index in these easy steps:

  1. Open a City Index account, or log in if you’re already a customer
  2. Search for the company you want to trade in our award-winning platform
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade

Alternatively, you can practise trading shares in a risk-free demo account.

How much is Rakuten Bank worth?

After going public, Rakuten Bank is expected to be valued at 106.8 billion yen ($807 million) based on the expected share price of 1,795 yen, according to Bloomberg. The bank’s parent company, Rakuten Group Inc., is currently valued at $7.66 billion with a share price of $4.89.

What is Rakuten Bank?

Rakuten Bank is an online banking company and the fintech arm of Japanese ecommerce company Rakuten Group. The bank offers an array of digital banking services:

  • Rakuten Bank is a fully licensed internet bank offering traditional accounts
  • Rakuten Card offers credit cards issued by Rakuten Bank
  • Rakuten Edy is a prepaid e-money card for use in over 400,000 affiliated stores
  • Rakuten Insurance offers life, pet and general insurance
  • Rakuten Pay is an app which allows users to make purchases online and in person
  • Rakuten Securities is an online brokerage providing access to financial assets like shares and ETFs
  • Rakuten Wallet offers users the ability to hold and trade cryptocurrencies

Rakuten Bank was expanded from Aozora Card Co., Ltd., a financial services company acquired by Rakuten Group in 2004. According to the Wall Street Journal, within ten years the banking company accounted for more than one-third of Rakuten’s total revenue. Rakuten Bank is now Japan’s largest digital bank with more than 13 million accounts as 2022.

The fintech company is integrated into many of Rakuten Group’s other subsidiaries including Rakuten’s online marketplace, e-book maker Kobo Inc., messaging companies Viber and Viki and mobile network Rakuten Mobile.

Who are Rakuten Bank’s competitors?

Rakuten Bank is the largest digital bank in Japan, but alternate online banks offered in Japan include KeyBank, Ardent Credit Union and GMO TECH Japan. The largest traditional banks in Japan include Mitsubishi UFJ, SMBC Group and Mizuho Financial Group.

Rakuten Bank is tightly integrated with other digital services owned and operated by Rakuten, which makes it different from competitors that focus solely on financial services.

What is Rakuten’s business model?

Rakuten’s business model is best thought of as an ecosystem of digital services and products. Rakuten Group originated as an online marketplace akin to Amazon or eBay. However, as those companies expanded into Japan, Rakuten switched focus from ecommerce to other tech sectors. The company now focuses on internet services including its domestic ecommerce businesses, mobile and fintech.

With all of its subsidiaries, Rakuten maintains common branding and linked membership programs that connect their otherwise distributed businesses: streaming, communications, travel, media, etc. The program is comparable to Amazon’s Prime membership, and it’s all connected by Rakuten Bank. The digital banking arm of Rakuten serves as the financial centre to provide customer benefits like cashback and reward points. In 2021 Rakuten issued $4.6 billion worth of reward points across ecommerce segments through its digital bank.

The bank also receives free advertising within Rakuten’s vast service market on its ecommerce marketplaces or through affiliate deals users are exposed to when checking out. For example, if a user is purchasing pet supplies, Rakuten may offer them pet insurance issued from Rakuten Bank.

Is Rakuten profitable?

Rakuten Group Inc. posted an operating loss of 367 million yen ($2.8 million) for the 2022 fiscal year. This loss was almost twice as large as the one posted in 2021. The company has spent handsomely on expanding a mobile services business it launched from scratch in 2020. In fact, many financial experts speculate the listing of Rakuten Bank is to acquire more capital to fund this expansion.

Rakuten Bank Ltd. posted a profit of almost 99 million yen ($759,000) for 2022. This is an increase of 10.8% from the previous year, which Rakuten credits to a still-growing volume of online shopping transactions and new record highs in domestic stock transactions and customer retention rates.

Who owns Rakuten Bank?

Rakuten Bank is owned wholly by its parent company Rakuten Group Inc. After the listing, Rakuten Bank’s ownership ratio will be around 64% with the other 36% held by shareholders.

Rakuten board of directors

The Rakuten board of directors consists of more than half of independent, outside directors along with an advisory committee of independent auditors. Here is the Board of Directors for Rakuten Group Inc. as of March 30, 2023:

  • Masayuki Hosaka: Vice Chairman and Representative Director
  • Kentaro Hyakuno: Group Exec VP and Representative Director
  • Kazunori Takeda: Group Exec VP and Director
  • Kenji Hirose: Group Exec VP and Director
  • Sarah J. M. Whitley: Director
  • Charles B. Baxter: Director
  • Takashi Mitachi: Director
  • Jun Murai: Director
  • Takaharu Ando: Director
  • Tsedal Neely: Director
  • Shigeki Habuka: Director
Related tags: Insights IPO Japan

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