Shares of Japanese tech giant Rakuten jumped 20% on Monday, boosting its gains following the company’s announcement that it plans to raise $ 2.2 billion to better compete with its U.S. rivals.
Rakuten said Friday it will sell an 8.3% stake to postal and banking giant Japan Post, which will be the largest shareholder outside the founding Mikitani family. Chinese Internet company Tencent will have a 3.6% stake, while US retailer Walmart will buy a 0.9% stake.
Rakuten has more than 70 companies ranging from e-commerce, mobile network, video streaming and financial technology. It has a market capitalization of about 1.79 trillion Japanese yen ($ 16.4 billion).
Hiroshi Mikitani, founder, president and CEO of Rakuten, told CNBC on Monday that his company “is growing very fast, even at this size, and that we need more capital for growth.”
The logo of the Japanese technology giant Rakuten seen at the Mobile World Congress 2019.
Paco Freire | SOUP Pictures | LightRocket via Getty Images
He explained that Rakuten and Japan Post are jointly developing artificial intelligence capabilities to make deliveries more efficient, especially in rural areas. The two companies could also collaborate on fintech, Mikitani said.
Irruption into the Chinese market
Meanwhile, the link with Tencent marks another attempt by Rakuten to penetrate the Chinese market. Mikitani said his company had a failed alliance with Chinese Internet giant Baidu in the past.
“I need to be very honest and China has been a very difficult market to penetrate,” he told CNBC’s “Squawk Box Asia”.
“Now, in partnership with Tencent, we have a channel to export Japanese products to the Chinese market, as well as export Japanese content … also to the Chinese market,” he added.
Rakuten’s revenue last year stood at 1.46 trillion yen ($ 13.335 billion), an increase of 15.2% over the previous year. But it suffered an operating loss of 93.85 billion yen ($ 860.57 million) in 2020, reversing the operating profit of 72.75 billion yen a year ago.