Rakuten Bank Ltd. (5838.T), Japan’s largest online lender, had its share price rise as much as 40% in its market debut on Friday, despite downsizing its $625 million IPO.
The Tokyo Stock Exchange closed at 1,930 yen, up from 1,400 yen at the IPO.
Due to a torrent of buy orders, it spent the first hour of its debut untraded before jumping to 1,965 yen, exceeding the highest intended IPO price before the deal was pulled back.
Rakuten Bank’s IPO was Japan’s largest in almost four years, despite concerns about a banking sector reeling from U.S. bank collapses and its link to money-losing e-commerce parent Rakuten Group Inc (4755.T).
Rakuten needs the funds from the share sale after four years of losses from its mobile phone network build-out and subsequent struggles.
Rakuten Bank CEO Hiroyuki Nagai told a news conference that the lender does not need to issue new shares until March 2027, when its mid-term business plan expires.
Nagai said it wouldn’t pay dividends for a few years but would reconsider.
Travis Lundy of Smartkarma called the IPO price “cheap,” given the bank’s return on equity.
“It still has possibilities for more growth going forward,” Lundy said, albeit growth rates in deposits, assets, and customers may be slower than in recent years.
The lender closed Friday at 328 billion yen ($2.45 billion).
Rakuten Bank offered 53.95 million existing and 5.55 million additional shares to domestic and foreign investors. They initially cost 1,960 yen each.
International demand was so robust at the lower price that bankers boosted the share sale available to foreign buyers, documents showed.
Lead manager Daiwa Securities said the foreign part was still 15 times oversubscribed.
Comment Template