Shares of Japanese tech giant Rakuten rose 20 percent on Monday, expanding its earnings after the company announced plans to raise $ 2.2 billion to compete better with its US rivals.
Rakuten said on Friday that it would sell an 8.3% stake in the postal and banking giant Japan Post, which will be the largest shareholder outside the Mikitani founding family. Chinese internet company Tencent will take a 3.6% stake, while US retailer Walmart will buy a 0.9% stake.
Rakuten has over 70 businesses, from e-commerce, mobile networking, video streaming and financial technology. It has a market capitalization of about 1.79 trillion Japanese yen ($ 16.4 billion).
Hiroshi Mikitani, the founder, president and CEO of Rakuten, told CNBC on Monday that his company “is growing very fast – even at this size – and we need more capital to grow.”
The logo of the Japanese technological giant Rakuten logo seen at the Mobile World Congress 2019.
Paco Freire | Images SOUP | LightRocket via Getty Images
He explained that Rakuten and Japan Post are jointly developing capabilities in artificial intelligence to make deliveries – especially in rural areas – more efficient. The two companies could also collaborate on fintech, Mikitani said.
Entering the Chinese market
Meanwhile, the connection with Tencent marks 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 have to be very honest, and China has been a very difficult market for us to enter,” he told CNBC’s “Squawk Box Asia.”
“Now, in partnership with Tencent, we have an export channel for Japanese products to the Chinese market, as well as the export of Japanese content … to the Chinese market,” he added.
Rakuten’s revenue last year amounted to 1.46 trillion yen ($ 13.35 billion) – an increase of 15.2% from a year ago. 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.