Japanese tech giant Rakuten’s shares jumped 20% on Monday, expanding its earnings after the company’s announcement that it plans to raise $ 2.2 billion to better compete with its American rivals.
Rakuten said on Friday it would sell an 8.3% stake to postal and banking giant Japan Post, which will be the largest shareholder outside the founding family Mikitani. Chinese internet company Tencent will have a 3.6% stake, while American retailer Walmart will buy 0.9%.
Rakuten has more than 70 businesses ranging from e-commerce, mobile network, video streaming and financial technology. It has a market capitalization of around 1.79 trillion Japanese yen (US $ 16.4 billion).
Hiroshi Mikitani, founder, president and chief executive of Rakuten, told CNBC on Monday that his company is “growing very fast – even at this size – and we need more capital for growth”.
The logo of Japanese tech giant Rakuten seen at Mobile World Congress 2019.
Paco Freire | SOPA images | LightRocket via Getty Images
He explained that Rakuten and Japan Post are jointly developing artificial intelligence capabilities to make deliveries – especially in rural areas – more efficient. The two companies could also collaborate at fintech, said Mikitani.
Entering the China market
Meanwhile, the tie with Tencent marks yet another attempt by Rakuten to enter the Chinese market. Mikitani said his company had a failed partnership with Chinese internet giant Baidu in the past.
“I need to be very honest and China has been a very difficult market for us to penetrate,” he told CNBC’s “Squawk Box Asia”.
“Now with the Tencent partnership, we have a channel to export Japanese products to the Chinese market, in addition to exporting Japanese content … also to the Chinese market,” he added.
Rakuten’s revenue last year was 1.46 trillion yen ($ 13.35 billion) – an increase of 15.2% over the previous year. But it incurred an operating loss of 93.85 billion yen ($ 860.57 million) in 2020, reversing operating profit of 72.75 billion yen a year ago.