By Miho Uranaka and Sam Nussey
TOKYO (Reuters) – Japanese e-commerce and finance heavyweight Rakuten is considering a U.S. initial public offering of its credit card business, according to two sources familiar with the matter.
Rakuten last month began considering a possible U.S. IPO of one of Japan’s largest credit card companies, the sources said. Considerations are in the early stages, with other potential options including a stake sale to a strategic buyer, one of the sources said.
A trigger for considering a Rakuten Card IPO in the US was rival SoftBank’s plans to list app payment operator PayPay in the US, the source said. The sources declined to be identified because the information is not public.
The company’s considerations for an initial public offering in the United States have not been previously reported.
Rakuten did not respond to requests for comment. The company’s shares extended gains following the Reuters report, closing up 4.7%, compared with a 1.6% rise in the Topix index.
Mizuho Financial Group acquired a 15% stake in Rakuten Card for 165 billion yen ($1.1 billion) last year, valuing the business at more than 1 trillion yen, or $7 billion, and the two launched joint credit cards.
For PayPay, institutional investors see a base valuation of 2 trillion yen, but expect the valuation could exceed 3 trillion yen in the IPO that could take place as early as December, Reuters reported this week.
RAKUTEN BUSINESS CORE CARDS
Rakuten, led by its founder and CEO Hiroshi Mikitani, revolutionized Japan’s financial sector by simplifying the credit card application process and making them available to a broader range of consumers.
Credit cards are an important part of a network of Rakuten businesses that span online shopping, banking, travel and other services, and customers accumulate loyalty rewards points when making payments.
Rakuten listed Rakuten Bank in Tokyo two years ago, as the group suffered heavy losses due to the launch of a mobile network.
Rakuten also announced plans to list Rakuten Securities, but Mizuho injected financing by acquiring stakes in the brokerage and card businesses.
Rakuten Card has issued more than 30 million credit cards in Japan. The company’s non-GAAP operating profit grew 20% to 62 billion yen last year, but fell 4.5% in the April-June quarter of this year compared to the same period a year earlier due to higher costs.
Rakuten Card aims to expand its profits to 100 billion yen in the medium term and aims to expand its business with corporate clients, its CEO Koichi Nakamura said in March.