Shares of Japanese technology giant Rakuten rose 20% Monday, boosting its earnings after the company announced it plans to raise $ 2.2 billion to better compete with its US rivals.
Rakuten said Friday it will sell an 8.3% stake to postal and banking giant Japan Post, which will become the largest shareholder outside the founding Mikitani family. The Chinese internet company Tencent will take a 3.6% stake, while the American retailer Walmart will buy a 0.9% stake.
Rakuten has more than 70 businesses ranging from e-commerce, mobile network, video streaming and financial technology. It has a market capitalization of approximately 1.79 trillion Japanese yen ($ 16.4 billion).
Hiroshi Mikitani, the founder, chairman 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 to grow.”
The logo of the Japanese tech giant Rakuten logo on display at the 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 more efficient, especially in rural areas. The two companies could also work together on fintech, Mikitani said.
Break into the Chinese market
Meanwhile, the partnership with Tencent marks 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 has been a very difficult market for us to penetrate,” he told CNBC’s “Squawk Box Asia.”
“Now that we have a partnership with Tencent, we have a channel to export Japanese products to the Chinese market, as well as to export Japanese content… to the Chinese market,” he added.
Rakuten’s sales last year were 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.