Shares of Japanese tech giant Rakuten jump 20% after stake sale to Walmart, Tencent

  • Shares of Japanese tech giant Rakuten jumped 20% on Monday after it announced plans to raise $2.2 billion in a bid to better compete with its U.S. rivals.
  • Rakuten said in Friday it will issue new shares to Japan Post, Tencent and Walmart.
  • Hiroshi Mikitani, Rakuten's founder, chairman and chief executive, told CNBC that his company is "growing very fast — even at this size — and we need more capital for the growth."

Shares of Japanese tech giant Rakuten jumped 20% on Monday, extending their gains after the company's announcement that it plans to raise $2.2 billion in order to better compete with its U.S. rivals.

Rakuten said on Friday it will sell an 8.3% stake to postal and banking giant Japan Post, which will be the biggest shareholder outside of the founding Mikitani family. Chinese internet company Tencent will take a 3.6% stake, while U.S. retailer will buy a 0.9% stake.   

Rakuten has over 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 ($16.4 billion).

Hiroshi Mikitani, Rakuten's founder, chairman and chief executive, told CNBC on Monday that his company is "growing very fast — even at this size — and we need more capital for the growth."

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, said Mikitani.

Breaking into China's market

Meanwhile, the tie-up with Tencent marks 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 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 a partnership with Tencent, we have a channel to export Japanese products to Chinese market, as well as export Japanese content … to the Chinese market as well," he added.

Rakuten's revenue last year stood at 1.46 trillion yen ($13.35 billion) — an increase of 15.2% from a year ago. But it incurred 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.  

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