Rakuten Abandons IPO Plans for Securities Unit, Shifts Focus to Mobile Business

Rakuten Group, Inc., the Japanese e-commerce and digital services giant, has announced its decision to cancel plans to list its securities unit, Rakuten Securities, on the Tokyo Stock Exchange. The move, which was initially intended to raise funds for the company's mobile business expansion, signals a shift in Rakuten's strategic focus. This article explores the implications of this decision and its impact on Rakuten's financial position, mobile business expansion, and competitive advantage in the Japanese market.



Rakuten's mobile business has been a significant driver of growth for the company, with the gross transaction value of its services via mobile apps consistently rising. The operation of the mobile business is crucial for strengthening the "Rakuten Ecosystem" and realizing further growth of the Group, contributing to the enhancement of corporate value. However, the company's recent bond offerings and the cancellation of the IPO for Rakuten Securities raise questions about the funding strategy for its mobile business expansion.

The cancellation of the IPO for Rakuten Securities may impact Rakuten's plans to strengthen its financial position and fund its mobile business expansion. The IPO was intended to raise funds for the company's mobile network development and 5G implementation. With the IPO cancelled, Rakuten will need to find alternative sources of funding to support its mobile network development and 5G implementation. This could include additional bond offerings or other forms of financing.

The cancellation of the IPO may also affect the reception of Rakuten's bond offerings. Investors might be more cautious about investing in Rakuten's bonds if they perceive the company's financial situation as uncertain or risky. This could lead to higher interest rates or reduced demand for Rakuten's bonds, making it more challenging for the company to raise funds through this channel.

Rakuten's mobile business expansion plans may be slowed down without the funds from the IPO. The company may need to prioritize its spending or seek alternative funding sources to continue its mobile network development and 5G implementation. This could expose Rakuten to increased competition from other mobile network operators and fintech companies in the Japanese market.



Rakuten's previous plans to integrate its financial units, including Rakuten Bank, Rakuten Securities, Rakuten Card, and Rakuten Insurance, into one group by October 2023 aimed to improve collaboration across its fintech businesses, enhance data integration, and utilize AI to provide innovative financial services and add more value to customers. However, the company announced on July 29, 2024, that it had concluded that proceeding with this reorganization was not the best option for further expansion of the FinTech Ecosystem and enhancing competitive advantage. Therefore, the company decided to cancel the reorganization.

The cancellation of this integration plan may have significant implications for Rakuten's FinTech ecosystem and its competitive advantage in the Japanese market. By not integrating its financial units, Rakuten may miss out on potential synergies and cost savings that could have been achieved through better collaboration and data sharing among its financial services. This could lead to slower innovation compared to competitors that are actively integrating their financial services, potentially increasing competition in the market.

In conclusion, Rakuten's decision to abandon its plans to list Rakuten Securities on the Tokyo Stock Exchange is a strategic move that aligns with the company's overall financial strategy, focusing on disciplined management and maintaining a balance between growth investment and mid- to long-term financial soundness. However, the cancellation of the IPO may impact Rakuten's plans to strengthen its financial position and fund its mobile business expansion, particularly in light of the company's recent bond offerings. The company will need to explore alternative funding sources and adapt its strategic plans to maintain its competitive position in the Japanese market.