Mizuho Financial in talks to acquire 20% stake in Rakuten Securities

People with knowledge of the matter said that Bloomberg - Mizuho Financial Group Inc. is in talks to acquire a 20% stake in Rakuten Group Inc.'s securities arm.

The people said that the stakes in Rakuten Securities Inc. could total about 80 billion yen $554 million and would not be identified because the information is private. The Nikkei newspaper reported on Wednesday that an agreement could be reached by the end of the week.

Japan's biggest banks have been struggling to build scale in their online securities businesses, and compete with industry leaders like SBI Holdings Inc. and Rakuten. In June, Sumitomo Mitsui Financial Group Inc. agreed to take a 10% stake in SBI, the country's largest online brokerage.

Mizuho and Rakuten are in talks for various alliance opportunities, including investment in Rakuten Securities, but nothing has been decided, the bank said in a statement. A Rakuten Group spokesman made similar remarks.

Hiroshi Mikitani's Rakuten said in May that it is preparing a listing for its securities unit as the e-commerce giant diversifies its business. It's not clear what Mizuho's stake purchase would mean for the initial public offering, which hasn't been scheduled.

As investors get spooked by the global stock market slump, conditions for IPOs have deteriorated this year. Rakuten is planning to list its banking unit, so Goldman Sachs Group Inc. and Daiwa Securities Group Inc. were chosen as lead managers for the offering last month.

Rakuten has struggled since it launched a big push into Japan's saturated mobile market to compete with NTT Docomo Inc., KDDI Corp. and SoftBank Corp. The group s operating loss increased from a year ago, and S&P Global Ratings gave it a negative credit outlook last month, citing cash pressures.

In June, the Tokyo-based SBI said that the alliance between Sumitomo Mitsui and SBI will focus on online financial services for younger and mass-affluent customers.

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