Rakuten Group, Inc. and Macquarie Asset Management today announced that Rakuten Mobile, Inc., a subsidiary of Rakuten Group, will raise between JPY 150 billion to 300 billion (around $US1-2 billion)1 in funds for the sale and leaseback of a portion of its mobile network assets with a consortium of global leading infrastructure investors, led by Macquarie Asset Management and including British Columbia Investment Management Corporation, via the Macquarie Asia-Pacific Infrastructure Fund 3.
Through this arrangement, Rakuten Mobile will conduct fundraising in the form of a sale and leaseback transaction and will continue to manage and operate these mobile network assets. Rakuten Group will promptly announce the final amount and other conditions in due course.
Mickey Mikitani, Chairman and CEO of Rakuten Group, said, "I am delighted to announce this innovative partnership with Macquarie Asset Management, one of the world's leading infrastructure investors. They strongly believe in our vision for the future, and together, we've made our financial foundation even stronger. Rakuten Mobile is already well on its way to profitability, and with our new initiative, we will continue to build on this momentum as we aim to reach profitability even faster and become the top mobile carrier in Japan."
Verena Lim, Co-Head of Asia-Pacific Macquarie Asset Management Infrastructure and Chief Executive Officer of Macquarie Group in Asia, said, "We believe Japan's commitment to revitalize its digital economy and accelerate the pace of digital transformation presents significant opportunities to investors in the digital infrastructure sector. The Rakuten Ecosystem and Rakuten Mobile's network is at the very forefront of this digital evolution, and we are excited to partner with Rakuten Mobile to support and accelerate its business growth."
Macquarie has been present in Japan for more than 24 years, and Macquarie Asset Management has been investing in Japan as well as connecting Japanese investors to global opportunities across infrastructure, green investment and real estate. With deep expertise in managing funds in Asia-Pacific, together with on-the-ground teams equipped with strong local market knowledge and deep relationships, Macquarie continues to deliver investment opportunities and value for its clients.
Objective of this funding
The Rakuten Group is committed to its financial strategy of pursuing financing measures that balance growth-oriented investment with mid-to-long-term financial soundness and is currently working on balance sheet management through a reduction of total interest-bearing debt and proactive debt maturity management.
Rakuten Mobile's profitability has been improving in accord with a steady increase of its subscriber base and capex reduction. Furthermore, Rakuten Group's free cash flow in the Internet Services segment and dividends received from the Fintech segment continue to increase. The Group finance strategy aims to establish self-funding for the financing needs of Rakuten Mobile through internal cash flows within the Group by the end of this year.
Rakuten Mobile's cash flow before marketing costs is making steady progress towards profitability. At the same time, based on the assumption that a certain level of capital investment will continue in the future, it is important for the Group's financial strategy to ensure adequate liquidity until Rakuten Mobile achieves positive free cash flow on a standalone basis.
The large-scale capital financing of Rakuten Mobile improves its liquidity and establishes its self-funding platform. Additionally, the cash flow generated from Rakuten's Internet Services and Fintech businesses can be prioritized for reducing its interest-bearing debt, thereby enhancing its liquidity position in the Rakuten Group.
Securing long-term and large-scale funding for Rakuten Mobile from leading global infrastructure investors, to meet immediate funding needs, not only contributes to diversifying the company's financing methods and expanding its investor base but also is expected to further strengthen the Group's financial foundation.
