Shares of Japanese tech giant Rakuten jumped 20% on Monday, boosting their profits following the company’s announcement that it plans to raise $ 2.2 billion to better compete with its U.S. rivals.
Rakuten said on Friday it would sell a 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 take a 3.6% stake, while US retailer Walmart will buy a 0.9% stake.
Rakuten has more than 70 businesses ranging from e-commerce, mobile networking, video streaming and financial technology. It has a market capitalization of approximately 1.79 billion Japanese yen ($ 16.4 billion).
Hiroshi Mikitani, founder, chairman and CEO of Rakuten, told CNBC on Monday that his company “is growing very fast – even in this size – and that we need more capital for growth.”
The logo of the Japanese technology giant Rakuten logo seen at the Mobile World Congress 2019.
Paco Freire | SOPA Images | LightRocket via Getty Images
He explained that Rakuten and Japan Post were jointly developing skills in artificial intelligence to make deliveries – especially in rural areas – more efficient. The two companies could also work together on fintech, Mikitani said.
Break into China’s market
Meanwhile, the alliance with Tencent is another attempt by Rakuten to penetrate the Chinese market. Mikitani said his company had a failed partnership with Chinese internet giant Baidu in the past.
“I have to be very honest and China was a very difficult market to penetrate,” he told CNBC’s “Squawk Box Asia”.
“Now with a partnership with Tencent, we have a channel to export Japanese products to the Chinese market, as well as to export Japanese content … also to the Chinese market,” he added.
Rakuten’s revenue was 1.46 trillion yen ($ 13.35 billion) last year – up 15.2% from a year ago. But it posted 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.