Rakuten Bank (TYO: 5838) saw its shares soar as much as 40 percent in its market debut on the Tokyo Stock Exchange on April 21, 2023.
Despite scaling back its $625 million initial public offering (IPO), the company's shares closed at 1,930 yen, up from its IPO price of 1,400 yen.
This is the largest debut in Japan since SoftBank Corp.'s $20 billion-plus IPO in December 2018.
Rakuten Bank's successful listing breathes new life into Tokyo's IPO market, which had not seen an initial share sale of more than JPY 50 billion this year.
The share sale provides a much-needed cash infusion for its parent company, Rakuten Group Inc, which has suffered losses from the costly build-out of its mobile network and subsequent struggles.
Rakuten Group plans to retain a 63% stake in the bank after the IPO.
It has offered up to 84% of the shares available in the IPO.
However, Rakuten Bank CEO Hiroyuki Nagai said during the press conference the bank does not need to sell more new shares until at least March 2027, when its medium-term business plan ends, according to various reports.
In addition, the bank has no short-term plans to pay dividends, although it will review this policy in the coming years.
The listing is part of Rakuten Group's strategy to expand its financial business as competition from Amazon.com Inc. has limited its core e-commerce revenue.
However, analyst Travis Lundy said the IPO price was "low" given the bank's return on equity and that there is still room for growth, albeit potentially at slower rates than in previous years.
Rakuten Bank's IPO highlights robust demand for Japan's largest online lender and signals renewed interest in the country's IPO market.
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