Daily Brief Financials: Rakuten Securities, JPY, Draper Esprit, Grupo Financiero Banorte and more

• Rakuten Securities (RAKUSEC JP), a leading Japanese online brokerage, seeks to raise US$500 million. Rakuten Group (4755 JP) (80.01%) and Mizuho Financial Group (8411 JP) (19.99%) are its shareholders.  
• In Rakuten Securities IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The key elements of the bear case rest on rapidly slowing operating revenue and commissions growth, lowest per-account monetisation rates vs peers and mid-tier profitability. 

• The JPY market is one big roller-coaster at the moment as the market constantly tries to sniff out potential clues on when the Bank of Japan will catch up to the rest of the G10 central banks with a tighter policy.
• In this piece, we look at the pros and cons of moving already this Friday for the Bank of Japan, but let’s take a look at the current back-drop before we move to the actual policy decision.
• Markets started pricing in an elevated risk of a further increase to the yield-curve-control cap on Friday after a spike in wage data three weeks ago.

Molten Ventures has recently faced pressure on tech valuations and muted deal activity from macroeconomic headwinds. That said, management reflected the lower public multiples in Molten’s H123 valuations, with greater stabilisation occurring in H223 (gross portfolio value was down 19% excluding FX in FY23 but only 2% in H223). Molten now offers exposure to a curated portfolio of 70+ assets at a significant discount to NAV. Management remains confident the portfolio is well funded, with 80% of the Core portfolio having a cash runway of more than 18 months on current projections, and expects weighted average top-line growth of over 65% in 2023 across the Core portfolio. Therefore, it still assumes a limited £20m funding requirement across the portfolio in FY24.

• Mexican banks, along with other Mexican assets, have benefitted from the near-shoring theme and more recently, the investor sentiment change in favour of EM assets which also supported bank shares
• Yet bank sector headwinds are emerging in the data to May, with rising funding costs eroding credit spreads and worsening credit quality trends implying a worsening in the credit cycle
• We believe that Banorte’s 2Q23 results vindicate our caution on the shares, with evidence of spread pressure and rising credit costs; we prefer to gain Mexican bank exposure through BBVA