Rakuten Stock Surges on Plans for Fintech Integration

On Monday, Rakuten group stock rose following the announcement of its plans to integrate its fintech businesses into one group.

In the Asian afternoon trading session, the Tokyo-based company stock rose by 3.68% to ¥876.00 ($5.79) apiece.

The debt-laden online retailer seeks to enhance cooperation and attract more customers across various sectors, including online banking, credit cards, securities, and insurance.

Additionally, Rakuten Group and Rakuten Bank have agreed on a memorandum of understanding (MOU) regarding the reorganization, scheduled to come into effect in October, as stated by the companies in their announcements.

Moreover, the company said that the Rakuten Bank would persist to be listed on the Tokyo exchange following the integration.

The financial performance of the parent company, which is focused primarily on the e-commerce platform Rakuten Ichiba, has been impacted since the launch of its mobile carrier in 2020, resulting in 14 consecutive quarters of operating losses.

Meanwhile, the group is contemplating a reorganization as part of its ongoing assessment of future strategies, efficient allocation of resources, and streamlining of group structure.

Furthermore, the Japanese conglomerate has utilized various strategies to raise cash, such as issuing equity and debt and divesting assets. For instance, in April 2023, Rakuten listed Rakuten Bank.

Fintech Merger Hopes Rakuten to Recover Losses

According to the data, the group has reported net losses for five consecutive years, primarily due to challenges in its mobile phone business.

If the integration is successfully implemented, the planned initial public offering (IPO) of its securities unit may not move forward. However, as the company stated, the banking arm is anticipated to continue being listed even after the reorganization.

Meanwhile, in Tokyo trading, Rakuten Group surged by up to 5.00%, while its banking unit saw an increase of as much as 6.80%, reaching its highest level since its listing a year ago.

Following five consecutive fiscal years of losses, the parent company will have to repay approximately ¥700 billion in bonds due in 2024 and 2025.

On the other hand, the Japan-based firm Bank has been expanding its customer base, partly due to the group’s reward point system, which is aimed at retaining users. As a result, it revised its annual profit forecast upward earlier this year.