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CAPITAL MARKETS

Rakuten prepares digital bank IPO despite dismal market

Rakuten’s adventures in mobile have given the Japanese e-commerce group a rabid thirst for capital. So much so that it is prepared to list the group’s digital bank at the worst possible time.

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Hiroshi Mikitani, founder of Rakuten. Photo: Reuters

If you had to pick the worst time to launch the IPO of a digital bank in Asia, right now would be a decent candidate.

A year or so ago, Korea’s KakaoBank briefly became the most valuable bank in the country after a knockout listing; today it trades at barely a third of its launch price. The tech sector is in freefall and Asian fintechs – Paytm, Alibaba/Ant – have felt the worst of it.

Yet in July, the Japanese e-commerce group Rakuten – often dubbed Japan’s Amazon – chose this moment to announce the IPO of its own digital banking arm. Daiwa is appointed as underwriter, and it has quite a job to do.

Why would anyone do this? The answer has to do with a strikingly ambitious plan by founder Hiroshi Mikitani to transform Rakuten from an e-commerce group to a telecoms player, with a mobile network ready to go head to head with NTT DoCoMo, SoftBank and others. Combining all these things – consumer e-commerce, telecoms, banking, brokerage – would make a powerful force.

But