Japan’s PayPay Corporation jumps 13.5% on first day of NASDAQ trading, market cap hits 18 trillion won

Financial News Tokyo correspondent Seo Hye-jin reported that PayPay Corporation, a Japan-based smartphone payments giant under SoftBank Group Corp., closed at $18.16 per share on the first day of its listing on the Nasdaq Stock Market (NASDAQ) on the 12th (local time). This is 13.5% above the initial public offering (IPO) price of $16. Based on the closing price, the company’s market capitalization came to about $12.1 billion, or roughly 18 trillion won.
According to the Nihon Keizai Shimbun (The Nikkei) on the 13th, PayPay managed to avoid falling below its IPO price even as the broader market was weak due to tensions in the Middle East. The company had initially proposed an IPO price range of $17 to $20, but the final price was set at $16 on the eve of the listing, the 11th.
Although demand from institutional investors was several times the number of shares on offer, the IPO price was still set at a relatively low level. Nick Einhorn, head of research at Renaissance Capital, suggested, "Recent shifts in market conditions driven by heightened tensions in the Middle East may have played a role."
Meeting with reporters that day, PayPay President Ichiro Nakayama stated, "We aim to build a new growth model in which a Japanese company accesses the U.S. capital market directly and achieves strong growth," adding, "We will use the funds raised through the listing to develop services that are closely tied to everyday life."
In this IPO, PayPay sold about 55 million American Depositary Shares (ADSs), raising more than $900 million. The company plans to use the proceeds for product development and marketing related to its entry into the U.S. market, as well as for mergers and acquisitions to expand its business.
PayPay currently has about 73 million users. Among smartphone payment services, it accounts for 96% of peer-to-peer transfer transactions, and it captures roughly two-thirds of Japan’s QR code payment transaction value. Recently, it has also applied for a banking license and is seeking to expand into lending for small and medium-sized enterprises and the credit card business.
What PayPay is aiming for is a platform that offers a wide range of financial services centered on payments.
Looking ahead, the company envisions a structure in which bank account linkage, card payments, point payments, insurance, securities, and investment services are all provided within a single app.
Until now, PayPay has focused mainly on services within Japan, but it is now accelerating its overseas expansion. In September last year, it expanded its service so that it could also be used in South Korea, and in February this year it announced its entry into the U.S. market through a partnership with Visa.
In the United States, PayPay plans to establish a new company that it will lead and is preparing a new payment service that will support both Near Field Communication (NFC) and QR code payments.
Commenting on PayPay’s move into the U.S. market, Josef Schuster, founder of U.S. market research firm IPOX Schuster, said, "Competition in the U.S. payments business is intensely competitive. However, the U.S. still does not have a comprehensive financial platform. There may be an opportunity in that space."
Regarding the expansion of overseas operations, including in the United States, CEO Nakayama stressed, "A detailed review is only just beginning," and added, "We will first establish our business model in Japan and then compete in the global market."
At present, PayPay is not listed in Japan. Industry observers say one reason it chose the U.S. market is that, compared with Japan, the United States tends to assign higher valuations to fintech companies.
Masamitsu Oki, portfolio manager at Five Star Investment, commented, "In the Japanese market, it is difficult for valuations to be set at high levels," and added, "It is understandable that they chose a U.S. listing, where their growth potential can be more fully recognized."
However, there are also concerns. Even after the listing, SoftBank Group Corp. still holds about 90% of PayPay’s voting rights, leaving a limited free float. Observers also point out that the structure constitutes a "parent-subsidiary dual listing," in which both the parent company and its subsidiary are listed.
The Nikkei also noted that it will not be easy for Japanese fintech companies to succeed in the U.S. market. Mercari, one of Japan’s unicorn companies that entered the United States, is struggling in its local operations. The Nikkei reported, "The U.S. market presents high entry barriers for Japanese companies and is a market where they must endure rigorous scrutiny from investors."

sjmary@fnnews.com Seo Hye-jin Reporter