China-based internet company Tencent paid $736m on Friday for a 19.9% stake in 58.com, a China-based online marketplace for sellers and customers that provides a similar service to western sites such as Craigslist or Gumtree.
58.com went public in in the US through a $187m initial public offering in October 2013, having previously raised about $140m from venture capital and private equity investors. It subsequently raised $228m follow on offering in March 2014.
In the aftermath of the March public offering, Warburg Pincus held 21.4% of the company, SAIF Partners 17% and DCM 14.9%, while Nihao China, an investment vehicle for 58.com CEO Jonbo Yao, owned 18.5%.
The shares were bought by Tencent at a price of $40.00 per share, well below 58.com’s closing price on Thursday of $52.22. The shares rose again on Friday to finish at $54.90.
Tencent and 58.com also signed a partnership agreeing to jointly develop online-to-offline services that can make use of both their platforms, and 58.com will aim to drive up its web traffic through accessing users of Tencent’s various online properties.
Tencent meanwhile is making the investment in order to expand its e-commerce capabilities in China, having already invested in or struck partnerships with firms including online city guide provider Dianping, direct selling company JD.co, taxi ordering app Didi Dache and real estate listings company Leju.