Rakuten Considers IPO for Credit Card Business in the U.S.
TOKYO, Oct 15 – Japan’s Rakuten is exploring the possibility of an initial public offering (IPO) for its credit card division in the United States, according to sources familiar with the situation. Discussions are still in the early stages, and the company might also consider other options, such as selling the business to a strategic buyer.
This move comes amid increasing competition, particularly from rival SoftBank, which is reportedly preparing to list its payment app, PayPay, in the U.S. Some insiders have indicated that the considerations for Rakuten’s IPO were not publicly known until now.
Rakuten has not yet responded to inquiries for comment. Interestingly, following the news, Rakuten’s stock saw a 4.7% increase, while the broader TOPIX index rose by 1.6%.
Mizuho Financial Group had previously acquired a 15% stake in Rakuten Card for approximately $1.1 billion, valuing the entire business at over 7 billion dollars. The two companies have linked up to offer a joint credit card.
Stock market analysts suggest that PayPay could be valued at 2 trillion yen, but an upcoming IPO could elevate that figure to over 3 trillion yen.
Credit Cards: A Core Part of Rakuten’s Business Model
Rakuten, under the leadership of Hiroshi Mikitani, has revamped Japan’s financial landscape, making credit cards more accessible to a wider audience. The company’s credit card service plays a crucial role, allowing customers to earn rewards through their transactions.
Last year, Rakuten Bank was launched, and it faced initial losses due to challenges in establishing its mobile network. There’s also been talk about a potential listing for Rakuten Securities as part of revenue diversification.
Rakuten Card has issued over 30 million credit cards in Japan, recording a 20% rise in operating profit last year, though it faced a 4.5% drop in profits during the April to June period this year due to cost increases.
Looking ahead, CEO Koichi Nakamura has expressed ambitions to boost profits to 100 billion yen and is investigating ways to enhance services for corporate clients.
Globally, many companies are opting for IPOs, seeking higher valuations in the U.S. market, which has seen significant activity. Recent reports indicate that the IPO landscape is at its busiest since late 2021, with 24 billion dollars raised through initial stock sales in the last quarter alone.
