Lessons from the Rakuten Bank IPO
Tech-related bank deals can still get away, but investors call the shots now.
The Rakuten Bank IPO on in April tells us that fintech or internet banking IPOs can still get away in these treacherous times – but with a considerable trade off.
Rakuten Bank and its lead banker, Daiwa Securities, have been trying to navigate a path to listing since announcing their intentions to do so in July 2022.
The deal faced challenges both external and entirely self-inflicted. As Euromoney reported in September, Rakuten was not only picking possibly “the worst time to launch the IPO of a digital bank in Asia”, as we said then, but also faced widespread concern about what the Rakuten parent was doing, transforming the Japanese conglomerate from an interesting e-commerce play into a national telco.
The requirement to build a mobile network sufficient to go head-to-head with NTT DoCoMo is expensive – and precisely the reason Rakuten couldn’t wait for more benign times to launch its digital bank listing.
Consequently, Daiwa and Rakuten found themselves forced to make an accommodation with the market. They started out pitching the deal at an indicative range with ¥1,960 ($14.64) at the top of it. Investors were having none of that. The deal eventually sold at ¥1,400 a share – and then promptly went right up to ¥1,960 on its first day of trading anyway.