Japan Post Holdings said on Friday it booked an impairment loss of US$587.5 million in the April to June quarter on its stake in beleaguered Japanese e-commerce giant Rakuten Group.
Rakuten shares dropped to $3.45 at Friday’s close, a level last seen in 2009 and well below the $7.91 per share Japan Post paid to acquire 8.32 per cent of the firm in March 2021.
Japanese accounting rules state that companies must register the impairment loss should a holding fall below 50 per cent of the purchase price with no prospect of recovery. The loss amounts to over 50 per cent of Japan Post’s $1 billion original investment.
Japan Post and Rakuten announced a capital and business alliance two years ago, but the cash-burning rollout of the latter’s mobile business has brought about four consecutive years of losses.
To raise much-needed cash, Rakuten listed its banking arm and has said it plans to do the same for its securities unit.
In May Reuters reported that Rakuten planned to raise around $2 million by issuing new shares, precipitating a record 9 per cent daily drop in its share price.
- Reporting by Anton Bridge; Editing by Susan Fenton, of Reuters.
