Rakuten Slides Most Since May on Fintech Reorganization Delay
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(Bloomberg) -- Rakuten Group Inc.’s shares slid as much as 6.7% in their biggest intraday drop since May on delays to the Tokyo-based online shopping mall operator’s plans to combine its fintech operations.
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A plan to reorganize Rakuten’s banking, securities, credit card and insurance businesses under one umbrella had fueled optimism around the debt-ridden company, which for years has been trying to turn around its loss-churning wireless business.
But such a move would not take place until January, instead of a previous goal of October this year, the company said, citing regulatory issues and consideration of Rakuten Bank minority shareholder interests. Shares of Rakuten Bank fell as much as 6.9%.
Billionaire Hiroshi Mikitani’s company faces about ￥500 billion ($3.2 billion) worth of corporate bond redemptions through 2025. Concern is growing that the company may miss an opportunity to cash in on the integration of its fintech arms before that deadline.
Rakuten Bank President Hiroyuki Nagai earlier told Bloomberg News that the bank would protect the interests of its minority shareholders, even if that meant not going through with the group’s fintech restructuring plans.
What Bloomberg Intelligence Says
Rakuten’s decision to delay the reorganization of its fintech business until January 2025 reinforces our view that the plan could encounter regulatory hurdles and shareholder opposition, because it might involve sales of unlisted fintech units — Rakuten Card and Rakuten Securities — with a combined valuation bigger than that of Rakuten Bank. Any further delay could increase the group’s funding shortfall risk of about ￥250 billion by mid-2025.
-Marvin Lo and Chris Muckensturm
The parent company, which has posted losses for five straight fiscal years, last year sold down its stake in newly-listed Rakuten Bank to raise funds to shore up finances depleted from an ill-timed foray into the country’s saturated mobile carrier sector.
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