by Sam Nussey and Miho Uranaka

TOKYO (Reuters) – SoftBank is considering a U.S. listing for its PayPay payments business, three sources familiar with the matter say, a listing that comes as SoftBank is already preparing for the IPO of chip designer Arm.

New York is seen as more attractive than Tokyo for listing companies there, as valuations of technology companies are generally higher there, according to a source.

The IPO date is not yet set as money-losing PayPay must first demonstrate that it will become profitable, the source said.

SoftBank has already discussed its desire to list PayPay, with an executive saying in November that the company was worth just under 1 trillion yen (6.50 billion euros). That the conglomerate is considering a listing in the United States had so far not been mentioned.

Representatives of PayPay and SoftBank Corp, the Japanese telecommunications company of the SoftBank Group, said they would not comment on rumours. PayPay is owned by SoftBank Corp, its holding Z Holdings, and the group’s second Vision Fund.

Shares of SoftBank Group closed 2% higher as Z Holdings jumped nearly 6%, their biggest one-day gain since February.

Listings of Japanese companies in New York are rare. Tokyo-based Line messaging had a dual listing in 2016 and later merged with a subsidiary of SoftBank, with Syla Technologies’ listing in March being a more recent example of a US listing, according to Dealogic.

“Z Holdings shares reacted on hopes that a U.S. listing would lead to a higher valuation, but the recent Japanese listings of Rakuten Bank and SBI Sumishin Net Bank show that fintechs can also list on domestic markets,” says analyst Kirk Boodry at Astris Advisory Japan, who puts PayPay’s valuation at between 800 billion and 900 billion yen.

LOSSES

SoftBank founder Masayoshi Son recently pledged to get “offensive” on artificial intelligence, which is attracting interest – and funds – from global investors. The founder had remained in decline after the drop in technology values.

PayPay, which offers QR code payment services, is used by more than 55 million people in Japan, making it a top player in a crowded digital payments market.

The group has benefited from government efforts to encourage consumers to pay digitally rather than cash, and has grown by offering significant rate cuts to its customers.

PayPay posted a loss before interest, tax, depreciation and amortization of 11.9 billion yen for the year ended March, compared with a loss of 43.2 billion yen a year earlier.

SoftBank is targeting profitability for its financial unit, which includes PayPay, for the year ending March 2026. PayPay is the most popular mobile payment service in Japan, according to a user survey by Mobile Marketing Data Labo.

SoftBank plans to IPO British chip designer Arm in the US, to raise money following plummeting valuations in the tech sector.

(Report Sam Nussey, Miho Uranaka, Scott Murdoch, Corentin Chapron, edited by Kate Entringer)

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