Shares of Japanese e-commerce giant Rakuten jumped 24% on Monday after the company announced plans to raise $2.2 billion to shore up its logistics infrastructure from artificial intelligence to mobile in order to better compete with US heavyweights.
In total, Rakuten plans to issue 211,656,500 shares at the equivalent of around $10.50 apiece with a payment date between March 29 and April 30.
Japan Post is expected to purchase 131,004,000 shares for an 8.3% stake while Chinese technology conglomerate Tencent is expected to buy 57,382,900 for a 3.6% stake. American retail giant Walmart is expected to get 14,536,000 shares for a 0.9% stake.
“These new investments in Rakuten indicate both high expectations for the growth and impact of the Rakuten Ecosystem with the mobile service at its core, as well as great potential for further collaboration with leading companies from the world’s three leading economies,” Hiroshi Mikitani, Rakuten Chairman and CEO, said in a statement.
The company, founded in 1997, also added that apart from boosting its technological backbone to keep up with the “rapidly changing internet industry,” the selling of shares is also to “strengthen the relationship with the panned allottees.”
Rakuten currently has over 70 businesses, and admitted in the statement that stable logistics services have become a “pressing issue,” especially amid the pandemic. This explains its partnership with the national postal service of Japan, which has a nationwide distribution network as well as a huge delivery volume and data.
As for Tencent, one of the largest businesses in China by market capitalization that specializes in social media and communication, it has been in contact with Rakuten for several years “especially on matters related to internet development trends,” the statement said.
“Rakuten has built a vibrant ecosystem through its membership and loyalty program, extending its [unrivaled] strength from e-commerce to FinTech and digital content,” Martin Lau, Tencent executive director and president, said. “We look forward to pursuing strategic cooperation across activities including digital entertainment and e-commerce, creating value for users and building the Internet ecosystem together.”
Walmart, meanwhile, is part of Rakuten’s push to ramp up the Japanese company’s online grocery business, “Rakuten Seiyu Net Super,” which has seen steady growth since 2018. Rakuten has also promoted the transition of the in-house official language into English since 2010 – a rare move for a Japanese company.
Rakuten, with its 1.5 billion members worldwide, has a market value of $16.5 billion.