Rakuten to raise $2.2bn as Japan Content, Tencent and Walmart purchase stakes

Rakuten plans to improve 242 billion yen ($2.2bn) by selling shares to investors including Tencent, Walmart and Japan Content.

Japan Post will purchase a stake of 8.3 per cent through new and existing shares in Rakuten while China’s social media head and the US retail giant will need smaller slices, a filing showed on Friday.

Shares of Rakuten and Japan Content surged as the arrangement builds on a preexisting alliance on logistics forged by both last year.

The Japanese e-commerce pioneer has benefited from a boom in online shopping through the pandemic, but faces stiff competition from Amazon. Last year, the company scaled again plans to provide free shipping after pushback from sellers which consists of program prompted regulatory scrutiny. Rakuten can be expanding rapidly into wireless mobile, hoping to disrupt the staid sector.

“The alliance will concentrate on e-commerce first, where access Japan Post’s network will be a crucial advantage,” Rakuten leader Hiroshi Mikitani said at a briefing in Tokyo. “We may also look into partnership in cellular and other businesses.”

Rakuten will invest the proceeds into logistics, artificial intelligence and its mobile network. Losing at the company’s wireless unit almost tripled to 227bn yen previous fiscal year as it spent money to build out its network and will be offering free provider to lure users.

The deal includes Rakuten’s a lot more than 100 million users and Japan Post’s last-mile usage of every home and a network of 24,000 post offices, the two companies said in a presentation. The postal group likewise operates a life insurance coverage business and a lender with about 120 million savings accounts.

“If Japan Content integrates a few of Rakuten’s online services to its huge nationwide network, this is often a reasonably big win for both,” Amir Anvarzadeh, a market strategist at Asymmetric Advisors in Singapore, wrote in an email to clients. “It offers one more reason to possess” Rakuten shares, he said.

The pair intend to create joint logistics centres and shared delivery and pick-up systems and can also share info to improve efficiency.

Post offices will variety counters where people can sign up for Rakuten’s mobile provider and utilize other services. They'll as well collaborate on cashless repayments and insurance. Further information on the partnership will be unveiled in April.

“We thought much time and hard about risk and go back before deciding on this investment,” Japan Content chief executive Hiroya Masuda explained at the briefing. “We assume that heading beyond a business arrangement to a capital tie-up will take this partnership to a fresh level.”