By
Temitope Olatunji
March 11th, 2024
Following the IPO, Rakuten Bank is billed to finally go public on the Tokyo Stock Exchange on April 21.
Rakuten Bank, the financial services offshoot of the Japanese conglomerate Rakuten Group is set to go live following a successful float of its Initial Public Offering (IPO). According to a report from The Business Times, Rakuten Bank priced its IPO at 1400 Yen, a point that coincided with the upper range of its revised pricing.
In the months and weeks leading to the IPO, Rakuten Bank set the IPO price at a range of 1,630 to 1,960 yen but it had to subtly reduce this pricing down to 1,300 to 1,400 yen in what appears to be a lower demand than anticipated from investors. At the 1,400 Yen price, the company has been able to raise the sum of 83.3 billion yen worth approximately $625.6 million.
“Not surprised at the pricing as, at the revised IPO range, the stock was attractively priced,” said Sumeet Singh, head of equity research, IPOs, and placements at Aequitas Research. “The company still offers a substantial discount to where the recently listed SBI Sumishin Net Bank has been trading.”
While Japan may not be known as a perfect destination for companies looking for a diverse investor base, it is generally recognized as one of its mega listings once in a while. As one of the most valuable companies in the country, SoftBank Group Corp (TYO: 9984) landed the biggest IPO back in 2018 when it went public in a public listing that was valued at $20 billion.
The Rakuten Bank showing is not an entirely bad one and the embrace, following the lower defined pricing set for the float, is a testament that investors are notably bullish on the bank and its stock.
Rakuten Bank and the Global Banking Outlook
Following the IPO, Rakuten Bank is billed to finally go public on the Tokyo Stock Exchange on April 21. A total of 60 million shares were sold to investors with an over-allotment of 4.5 million shares. Post-IPO, the Rakuten Group will maintain a 63% ownership of the new company.
The listing of Rakuten Bank is coming at a time when the global banking ecosystem is under intense scrutiny from both Central Banks, investors, and customers alike.
The collapse of Silicon Valley Bank (SVB) in the United States, as well as that of Credit Suisse Group AG (SWX: CSGN), showcased how fragile the banking industry is, and how investors need to take caution.
The sheer success of the Rakuten Bank IPO can be considered a vote of confidence in the parent company which has largely been faced with a revenue slump amid stiff competition in several of its key market segments. With cost-cutting measures featuring the slash in the salary of its CEO and the new opportunities this current listing will afford the firm, it is banking on driving intense revenue through innovative financial products.