TOKYO : Japan Post Holdings said on Friday it booked an impairment loss of 85.1 billion yen ($587.5 million) in the April to June quarter on its stake in beleaguered Japanese e-commerce giant Rakuten Group.
Rakuten shares dropped to 499 yen at Friday's close, a level last seen in 2009 and well below the 1,145 yen 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 150 billion yen 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 300 billion yen by issuing new shares, precipitating a record 9 per cent daily drop in its share price.
($1 = 144.7700 yen)