Tencent’s corporate venturing unit, Tencent Holdings, has invested a reported $214.7m to acquire a 15% stake in China e-commerce company, JD.com. According to Tencent, the two companies have formed the partnership so that the two can beef up superior eCommerce services to mobile and Internet users in China. The strategic partnership enables JD to tap Tencent’s significant mobile and internet user base ad Tencent can leverage JD’s eCommerce services.
As part of the deal, JD will become Tencent’s preferred partner for all physical goods eCommerce businesses. Martin Lau, President of Tencent, will join JD’s Board of Directors.
JD will acquire 100% interests in Tencent’s QQ Wanggou B2C and PaiPai C2C marketplace businesses, logistics personnel and assets, a minority stake in Yixun, and will enter into a strategic cooperation agreement with Tencent.
In addition, JD has the right to acquire the remaining stake of Yixun in future. As part of the strategic cooperation, Tencent will support JD ’s growth in the physical goods eCommerce business by offering level 1 access points in Weixin and Mobile QQ, and support from other key platforms to JD.
Both parties will also cooperate on online payment services to improve users’ online shopping experience. In connection with the transaction JD will issue new shares to Tencent. Initially, Tencent will hold approximately 15% in JD upon closing of the transaction. Tencent will subscribe at IPO price for an additional 5% of JD on a post.
The IPO subscription is expected to close concurrently with JD’s IPO.
Bank of America Merrill Lynch and China Renaissance acted as financial advisers to JD on this transaction. Skadden, Arps, Slate, Meagher & Flom acted as international counsel and Zhong Lun Law Firm acted as PRC counsel to JD.
There are also rumours that Tencent has invested a reported $400m in Dianping, a China online local life information and trading platform and one of the first online independent third-party consumer service rating sites worldwide. Dianping has raised $162m in venture capital from investors including Google Ventures.
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