Rakuten To Sell Bank Shares To Cut Debt From Mobile Foray

(Bloomberg) -- Rakuten Group Inc. plans to sell shares valued at $475 million in its banking affiliate to pay down debt as losses mount at its wireless carrier business.

The e-commerce group, which is expected to report its fifth straight year of losses this year, said it would sell 25.5 million shares of Rakuten Bank through an overseas secondary offering and use the proceeds for the early repayment of bonds.

Rakuten Bank will remain a consolidated subsidiary, it said. Based on Wednesday's closing share price, the stake sale would raise about ¥69.8 billion ($475 million). The group currently holds 110.5 million shares of Rakuten Bank, or about 63%, according to data compiled by Bloomberg.

The Tokyo-based company, founded by former investment banker Hiroshi Mikitani, has expanded beyond its core internet shopping mall business. Many of those bets, such as in online banking and securities, have been lucrative, but a foray into Japan's saturated mobile phone market has dragged down the group's bottom line.

The company earlier said that achieving profitability at the mobile unit, which competes with Nippon Telegraph & Telephone Corp. and KDDI Corp., as well as SoftBank Group Corp.'s wireless arm, would be difficult this year, even on a single-month basis.

Facing pressure to raise funds for roughly $5 billion of bonds due in the next two years, Rakuten listed Rakuten Bank in April and announced in May a new share issue. It's also said it plans to reapply for a listing of its securities arm.

Rakuten Group's shares have dropped about 33% over the past five years, while the Topix index has gained 48%.

(Updates with background from the fifth paragraph)

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