The logo of Japanese tech giant Rakuten at Mobile World Congress 2019.
Paco Freire | SOPA pictures | LightRocket via Getty Images
Shares in Japanese tech giant Rakuten rose 20% on Monday, expanding profits after the company announced it would raise $ 2.2 billion to better compete with its US peers.
Rakuten said Friday it would sell an 8.3% stake in postal and banking giant Japan Post, which will be the largest shareholder outside of the founding Mikitani family. Chinese internet company Tencent will acquire a 3.6% stake, while US retailer Walmart will acquire a 0.9% stake.
Rakuten has over 70 companies ranging from e-commerce to cellular networks, video streaming to financial technology. Its market capitalization is around 1.79 trillion Japanese yen ($ 16.4 billion).
Hiroshi Mikitani, founder, chairman and chief executive officer of Rakuten, told CNBC on Monday that his company “is growing very quickly even at this size and we need more capital to grow.”
He explained that Rakuten and Japan Post are jointly developing artificial intelligence skills to make deliveries more efficient, especially in rural areas. The two companies could also work together on fintech, Mikitani said.
Slump in China’s market
The collaboration with Tencent is 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,” he told CNBC’s Squawk Box Asia.
“With a partnership with Tencent, we now have a channel to export Japanese products to the Chinese market and export Japanese content … also to the Chinese market,” he added.
Rakuten’s sales last year were 1.46 trillion yen ($ 13.35 billion) – an increase of 15.2% year over year. However, in 2020 there was an operating loss of 93.85 billion yen ($ 860.57 million), reversing the operating profit of 72.75 billion yen a year ago.