Thursday, August 18, 2022
Thursday, August 18, 2022
Home Business Naspers-backed Tencent Acquires 19.9% Stake in China’s 58.com for $736 Million

Naspers-backed Tencent Acquires 19.9% Stake in China’s 58.com for $736 Million

by Sam Wakoba
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35987_fotoTencent Holdings Limited, a Chinese Internet services firm-34%  owned by South Africa’s media and ecommerce giant Naspers has bought a 19.9% equity stake in 58.com on a fully-diluted basis for US$736 million.

The deal will see 58.com use Tencent‘s services to build next generation online-to-offline (“O2O”) services and will solidify its leading position in local services by capturing traffic from Tencent’s various online properties such as QQ, Weixin, QQ.com, and QQ browser to further expand 58.com’s user base, improve the user experience by allowing users to access social tools to find recommended merchants, and help users improve the level of communication between each other and with merchants.

On the other hand, Tencent will expand its O2O ecosystem in China, which also includes Dianping, Didi Dache, JD.com, Leju. Its large social user base will benefit from the broadening local services offering, select quality vendors or merchants leveraging social sharing online and enjoy an enhanced user experience.

Tencent will help small and mid-sized enterprises and other merchants communicate with consumers via Weixin Official Accounts system or Enterprise QQ system, and complete transactions using Tencent’s online payment solutions. Merchants will benefit from better customer relationship management and improved consumer targeting via location-based functions.

58.com is China’s largest online marketplace enabling local merchants and consumers to connect, share information and conduct business.

Founded in 1998, Tencent operates QQ, Weixin and WeChat for communications; Qzone for social networking; QQ Game Platform for online games; QQ.com for information; as well as eCommerce services. It will purchase 36,805,000 Class A and B ordinary shares at a purchase price of US$20 per ordinary share, corresponding to US$40 per American Depositary Share, each representing two ordinary shares. In addition, 58.com will use part of the proceeds from this transaction to repurchase 27,603,750 ordinary shares from existing pre-IPO shareholders.

There has been growing interest in Chinese tech companies after Alibaba filed for a $250 billion IPO early May.

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