Japan’s Rakuten Considers US IPO for Credit Card Unit: Sources
Japanese e-commerce giant Rakuten is reportedly exploring the possibility of an initial public offering (IPO) for its credit card division in the United States. This consideration began last month and highlights Rakuten’s ongoing evolution in the financial services landscape.
Details of the IPO Consideration
Sources familiar with the situation indicate that the discussions are still in their initial phases. Alongside a U.S. IPO, Rakuten is also contemplating a potential stake sale to a strategic investor. These developments follow rival SoftBank’s plans to launch an IPO for its payment app PayPay in the U.S.
Market Context
The movement toward a U.S. listing comes as part of a broader trend among companies seeking higher valuations in the American market. The IPO landscape has recently experienced a surge, with deal activity reaching its highest level since late 2021. In the third quarter alone, IPOs raised approximately $24 billion, according to Dealogic.
About Rakuten’s Credit Card Business
- Ownership and Valuation: Mizuho Financial Group acquired a 15% stake in Rakuten Card for 165 billion yen ($1.1 billion), valuing the unit at over 1 trillion yen ($7 billion).
- Credit Card Impact: Rakuten Card has issued more than 30 million credit cards since its inception.
- Profitability: Non-GAAP operating profit rose 20% to 62 billion yen last year, although it saw a slight decline of 4.5% in Q2 2023 compared to the previous year.
- Future Projections: The company aims to boost profits to 100 billion yen in the medium term and is expanding its services to corporate clients.
Strategic Importance of Credit Cards
Under the leadership of CEO Hiroshi Mikitani, Rakuten has influenced Japan’s financial sector by making the credit card application process more accessible. The credit card services complement a broader array of Rakuten businesses, which include online shopping, banking, and travel services. Users earn loyalty points through transactions, enhancing customer engagement.
Conclusion
As discussions continue about a potential U.S. IPO for Rakuten’s credit card unit, the company is well positioned in the evolving financial services market. CEO Koichi Nakamura’s focus on profitability and partnerships may also play a critical role as the company navigates its next steps.
