Mizuho/Rakuten: pricey deal should help with digital banking push
Mizuho is not giving up on its seven-year long digital dream. Japan’s second-largest lender will buy almost a fifth of the online securities arm of billionaire Hiroshi Mikitani’s Rakuten Group. After several ill-fated attempts, it is finally on the right path.
Mizuho is paying a hefty price — Y80bn ($555mn) — for the minority stake in Rakuten Securities, which has 8mn accounts and managed assets of Y16.5tn as of the end of June. At about 3 times book value, Rakuten Securities’ valuation is more than 4 times that of Japan’s biggest online brokerage SBI.
Japanese conglomerate Rakuten needed to be well compensated to give up a piece of its core, most valuable asset. The fintech business is one of its few consistently profitable units. It has relied heavily on its securities and banking businesses to offset steep loss from ill-timed forays into businesses such as telecommunications. Its costly venture into Japan’s saturated mobile market was one of the main reasons for its $1bn loss for 2021. Its shares have fallen more than 40 per cent this year.
This story originally appeared on: Financial Times - Author:Tax Cognition
