Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Capital Markets

<ul>
<li>Rakuten Bank’s IPO will add an attractively valued Japanese neobank to the globally listed neobank universe; furthermore, the Rakuten Group ecosystem is a powerful tool for customer acquisition and retention</li>
<li>On efficiency metrics, Rakuten Bank scores well versus its key domestic peers as well as global comparables; Rakuten Group companies act as a key conduit for new clients</li>
<li>At the announced issue price of ¥1,400, Rakuten Bank’s PBV ratio implies an attractive 25% discount to its core Japanese peer SBI Sumishin Net Bank, for similar ROE</li>
</ul>


Rakuten Bank’s IPO will add an attractively valued Japanese neobank to the globally listed neobank universe; furthermore, the Rakuten Group ecosystem is a powerful tool for customer acquisition and retention
On efficiency metrics, Rakuten Bank scores well versus its key domestic peers as well as global comparables; Rakuten Group companies act as a key conduit for new clients
At the announced issue price of ¥1,400, Rakuten Bank’s PBV ratio implies an attractive 25% discount to its core Japanese peer SBI Sumishin Net Bank, for similar ROE


Rakuten Bank (5838 JP) – A Keenly Priced Quality Addition to the Global Neobanks Universe

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/rakuten-bank-ltd" target="_blank" data-smartkarma-citation="entities:35638:1" rel="noopener">Rakuten Bank (5838 JP)</a>, the online banking arm of <a href="https://www.smartkarma.com/entities/rakuten-group-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten (4755 JP)</a>, aims to raise up to around US$630m in its Japan listing in April 2023.</li>
<li>RB is the largest internet bank in Japan, by number of accounts. As of Dec 22, it had 13.3m deposit accounts with a total deposit base of JPY8.8tn.</li>
<li>In our earlier notes, we have looked at the company’s past performance and undertook a peer comparison. In this note, we talk about valuations in the IPO price range.</li>
</ul>



Rakuten Bank (5838 JP), the online banking arm of Rakuten (4755 JP), aims to raise up to around US$630m in its Japan listing in April 2023.
RB is the largest internet bank in Japan, by number of accounts. As of Dec 22, it had 13.3m deposit accounts with a total deposit base of JPY8.8tn.
In our earlier notes, we have looked at the company’s past performance and undertook a peer comparison. In this note, we talk about valuations in the IPO price range.


Rakuten Bank IPO - Lower Range Makes It Even More Attractive

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/rakuten-group-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Group (4755 JP)</a> is looking to sell 25.5m shares of <a href="https://www.smartkarma.com/entities/rakuten-bank-ltd" target="_blank" data-smartkarma-citation="entities:35638:1" rel="noopener">Rakuten Bank (5838 JP)</a> via a secondary offering at a discount of between 8.7%-12.3%.</li>
<li>The offering will raise a maximum of US$433m and <a href="https://www.smartkarma.com/entities/rakuten-group-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Group (4755 JP)</a> will use the funds to reduce its interest-bearing debt by the early repayment of its bonds.</li>
<li>There will be limited passive buying at the time of settlement of the stock but there is an index inclusion coming up that will result in passives buying.</li>
</ul>



Rakuten Group (4755 JP) is looking to sell 25.5m shares of Rakuten Bank (5838 JP) via a secondary offering at a discount of between 8.7%-12.3%.
The offering will raise a maximum of US$433m and Rakuten Group (4755 JP) will use the funds to reduce its interest-bearing debt by the early repayment of its bonds.
There will be limited passive buying at the time of settlement of the stock but there is an index inclusion coming up that will result in passives buying.


Rakuten Bank (5838 JP) Placement: Index Inclusion Will Absorb Some Stock

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>After the close today, <a href="https://www.smartkarma.com/entities/rakuten-group-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Group (4755 JP)</a> announced the sale of 25.5mm shares of <a href="https://www.smartkarma.com/entities/rakuten-bank-ltd" target="_blank" data-smartkarma-citation="entities:35638:1" rel="noopener">Rakuten Bank (5838 JP)</a>, right as the IPO lockup was reaching its expiry. Expected.</li>
<li>Pricing is 6-7 Dec (pre-Tokyo open 7 Dec), delivery 11 Dec 2023. Indicative price range is 8.5-12.5% discount for a deal of US$425mm or so.</li>
<li>In an interesting technical detail, this will take Rakuten <em>below 50%</em>. There is some near-term index demand, some in April, some next October. Rheos could be more overhang.</li>
</ul>


After the close today, Rakuten Group (4755 JP) announced the sale of 25.5mm shares of Rakuten Bank (5838 JP), right as the IPO lockup was reaching its expiry. Expected.
Pricing is 6-7 Dec (pre-Tokyo open 7 Dec), delivery 11 Dec 2023. Indicative price range is 8.5-12.5% discount for a deal of US$425mm or so.
In an interesting technical detail, this will take Rakuten below 50%. There is some near-term index demand, some in April, some next October. Rheos could be more overhang.


Rakuten Bank (5838 JP) Overnight Offering at a Fat Discount

<ul>
<li>
<a href="https://www.smartkarma.com/entities/rakuten-group-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Group (4755 JP)</a> aims to raise US$430m via selling around 14.6% of <a href="https://www.smartkarma.com/entities/rakuten-bank-ltd" target="_blank" data-smartkarma-citation="entities:35638:1" rel="noopener">Rakuten Bank (5838 JP)</a>. </li>
<li>RB is the largest internet bank in Japan, by number of accounts. As of Sep 23, it had 14.3m deposit accounts with a total deposit base of JPY9.5tn.</li>
<li>In this note, we will talk about the deal dynamics and updates since our last note.</li>
</ul>



Rakuten Group (4755 JP) aims to raise US$430m via selling around 14.6% of Rakuten Bank (5838 JP). 
RB is the largest internet bank in Japan, by number of accounts. As of Sep 23, it had 14.3m deposit accounts with a total deposit base of JPY9.5tn.
In this note, we will talk about the deal dynamics and updates since our last note.


Rakuten Bank Placement - Was Expected at Some Point, Current Timing Seems Opportunistic

Japan

Mebuki Financial Group Inc. is a holding company established through the merger of Joyo Bank and Ashikaga Bank. As a financial group, the Company offers deposits, Loans, foreign exchange transactions, commercial and trust banking. Mebuki Financial Group also provides financial services such as letter of credit, credit cards and consulting.

SBI Shinsei Bank, Ltd. provides banking services including deposits, loans, and foreign exchange transaction, as well as investment trust service and issuance of long-term bonds.

The Hachijuni Bank, Ltd. is a regional bank based in Nagano Prefecture. The Bank provides banking services such as deposits, loans, foreign exchange transactions, and trust accounts. The Bank also provides financial services such as leasing, credit cards, credit guarantee, debt recovery, trading, and venture capital and operates branches overseas.

The Bank of Kyoto, Ltd. is a regional bank in Kyoto.  The Bank provides banking services including deposits, savings, loans, foreign exchange transactions, and securities investments.  The Bank of Kyoto also provides financial services such as letter of credit, leasing, loans, and credit cards.

The Gunma Bank, Ltd. is a regional bank based in Gunma Prefecture.  The Bank provides banking services such as deposits, loans, and foreign exchange transaction.  The Gunma Bank also provides financial services such as leasing, credit cards, letter of credit, and investment advisory, and develops information systems.

Yamaguchi Financial Group, Inc. is a holding company established through the merger of Yamaguchi Bank and Momiji Holdings. The Group provides variety of financial services such as deposits, loans, foreign exchange transactions, leasing and credit cards.

Kyushu Financial Group, Inc. is a holding company established through the merger of Higo Bank and Kagoshima Bank.  The Bank provides banking services such as deposits, loans, and exchange transactions.  Kyushu Financial Group also provides other financial services including security brokerage, credit cards, leasing, and letters of credit.

Aozora Bank, Ltd. provides banking services including deposits, savings, loans, foreign exchange transactions, and securities investments. Aozora Bank also provides services such as trust account, resolution and collection, and venture capital.

The 77 Bank, Ltd. is a regional bank in Tohoku area.  The Bank provides general banking services including deposits, loans, and exchange transactions. The Bank also provides others financial services such as securities brokerage, trust banking, letter of credit, leasing, credit cards, and computer services.

Seven Bank, Ltd. provides banking services mainly through Automated Teller Machine (ATM) across Japan. The bank cooperates with affiliated financial institutions to establish the nationwide ATM network and provide remote banking services, including deposits and loans.

AMMB Holdings Berhad is an investment holding company.  The Company, through its subsidiaries, provides merchant and commercial banking, retail financing, stock and futures broking, and investment advisory. AMMB also underwrites general insurance, provides asset and unit trust management, and nominees services.

Atlantic Union Bankshares Corporation provides banking services. The Bank checking accounts, lending, credit cards, online and mobile banking, and wealth and treasury management services. Atlantic Union Bankshares serves customers in the United States.

Community Bank System, Inc. is a holding company for Community Bank, N.A.  The Bank offers a range of commercial and retail banking services in each of its market areas to business, individual, agricultural, and governmental customers. Community Bank operates in northern New York to the southern tier, west to Lake Erie, and in northeastern Pennsylvania.

International Bancshares Corporation, through its bank subsidiaries, provides commercial and retail banking services through offices in south and southeast Texas.  The Bank accepts deposits from the general public and uses those funds to make a variety of loans.

Cathay General Bancorp is the holding company for Cathay Bank.  The Bank accepts deposits and originates various loans, and offers trade financing, spot and forward contracts, internet banking, global investment services, and other services.  Cathay Bank operates in California, New York, Texas, Washington, and Massachusetts.

Fulton Financial Corporation is a multi-bank holding company. The Banks offer a full range of general retail and commercial banking services, including deposits, loans, equipment leasing and financing, and credit cards. Fulton operates in Pennsylvania, Maryland, Delaware, and New Jersey.

The Bank of East Asia, Limited and its subsidiaries provide general banking, related financial, business corporate, and investor services.

Huishang Bank Corporation Limited is a commercial bank. The Bank provides banking services including loans, money market operations, treasury business, investment and trading services, and valet transactions.

Taichung Commercial Bank conducts commercial banking and trust business.  The Bank accepts deposits, offers loans, as well as  invests in bonds and stocks. Taichung Commercial Banks provides bills and notes discounting, draft endorsement, domestic remittance, guarantee, and securities underwriting and brokerage services.

Ameris Bancorp is a multi-bank holding company. The Banks provide a broad range of retail and commercial banking services to its customers, including checking and savings deposits, commercial and consumer loans, trust services, discount brokerage services, and electronic funds transfer services. Ameris Bancorp operates in Georgia, Florida, and Alabama.

Rakuten Bank, Ltd. operates as an Internet based bank. The Company provides banking services including deposits, loans, exchange transactions, and other services. Rakuten Bank also provides financial services including investment trusts, securities, credit and cash cards, lottery tickets, and others.

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Rakuten Bank (5838 JP)