Billionaire Mikitani’s Rakuten Sells First Public Bond

Rakuten Inc. (4755), the Japanese e-commerce company led by billionaire Hiroshi Mikitani, issued its first public bonds today, selling 30 billion yen ($295 million) of three-year notes.

The operator of Japan’s largest Internet cybermall sold 10 billion yen of 0.377 percent notes at a yield premium of 27 basis points more than government debt, sale manager Daiwa Securities Co. said in a statement. The owners of the Tohoku Rakuten Golden Eagles baseball team separately sold 20 billion yen of notes to individual investors at a yield of 0.38 percent. Those securities are named after the team, which won Japan’s professional baseball series last year.

Rakuten, which has expanded operations from online shopping to banking, credit card and travel services since its foundation in 1997, is tapping domestic investors as yields on local debentures fell to their lowest in more than a decade yesterday, Bank of America Merrill Lynch index data show.

Borrowing costs dropped to an average 0.406 percent June 12, the least since June 2003 as the Bank of Japan’s about 7 trillion yen in monthly bond buying flattens government and corporate note rates.

Rakuten last month reported a 13 percent rise in first quarter net income to 16.1 billion yen from the previous year, beating analyst estimates. Operating profit for the period fell 1.5 percent to 22.6 billion yen, missing consensus estimates of 25.3 billion yen. Sales increased 22 percent to 138.3 billion yen.

Mobile-Application Investments

Rakuten is rated BBB+ by Japan’s Rating & Investment Information Inc., three levels above non-investment grade. It has about 297 billion yen of loans outstanding, according to data compiled by Bloomberg.

Mikitani, Rakuten’s largest shareholder, is investing in technologies such as mobile applications and online video as the Tokyo-based company seeks to expand beyond its core business. The strategy pits Rakuten against companies including SoftBank Corp., Amazon.com Inc. and Facebook Inc. It agreed to buy messaging service Viber Media Inc. in February for $900 million.

Mikitani, who goes by the nickname ‘Mickey’, is Japan’s third-richest person and the world’s 182nd wealthiest, according to data compiled by Bloomberg. The 49-year-old prefers employees be fluent in English to extend Rakuten’s global reach.

Shares in Rakuten are down about 20 percent this year versus a 5.4 percent decline in Japan’s Topix index.

To contact the reporter on this story: Finbarr Flynn in Tokyo at fflynn3@bloomberg.net

To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net Andrew Monahan

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