Rakuten Bank and its main shareholder priced shares at ?1,400 each in Japan¡¯s largest initial public offering in five years, marking the top of a target range that had been lowered earlier this month.
About ?83.3 billion ($625 million) was raised in the sale of shares in the banking unit of billionaire Hiroshi Mikitani¡¯s Rakuten Group, according to a statement on Thursday. Even with the lower than originally expected price, the listing is the largest in Japan since the $20 billion-plus IPO of SoftBank in December 2018.
The offering comes amid high volatility for banking stocks globally, after the failures of several U.S. lenders and turmoil at Credit Suisse. It also comes on the heels of the IPO of fellow online lender SBI Sumishin Net Bank, which has risen 38% since its debut in Tokyo last month.
¡°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.¡±
Rakuten Bank initially set an indicative price band of ?1,630 to ?1,960, then lowered that to ?1,300 to ?1,400, suggesting weaker than expected demand. The offer comprises roughly 60 million shares, with an overallotment of 4.5 million.
The listing is part of Rakuten Group¡¯s plan to expand its financial business. Stiff competition from Amazon.com has capped its core e-commerce revenues, while aggressive promotions for its struggling mobile unit have saddled the company with losses.
Rakuten cut Mikitani¡¯s salary by almost 40% last year. Investors and creditors have voiced concern over the viability of the company¡¯s foray into the Japanese mobile market, with the country¡¯s dominant carriers slow to yield coveted spectrum to the new entrant.
Rakuten Group offered up to 84% of shares available in the IPO, and will retain a stake of about 63% in the banking unit after the listing, according to terms of the deal. The stock is slated to list on the Tokyo Stock Exchange on April 21.
Daiwa Securities Group, Morgan Stanley, Goldman Sachs Group and Mizuho Financial Group are joint global coordinators on the deal.
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