Written by Gina Lee
Investing.com – Internet technology giant Tencent Holdings (OTC 🙂 Ltd. (HK 🙂 will hand over its stake in JD (NASDAQ :). Com Inc. to its shareholders. (HK :). Eligible Tencent shareholders will be entitled to one JD.com share for every 21 shares they hold.
Shares of JD.com in Hong Kong fell 7.09% to 259.40 HK $ (33.25 USD) to 23:36 ET (4:36 GMT), while shares of Tencent in Hong Kong jumped 4.02% to $ 460.80.
The stake, worth $ 127.69 billion ($ 16.37 billion), means Tencent is reducing its stake in JD.com from 17% to 2.3% after distribution. Tencent will no longer be the largest shareholder of JD.com after the transfer, and Walmart (NYSE 🙂 Inc. will take over the role, according to Refinitiva’s ownership data after the transfer.
Tencent, whose first investment in JD.com was in 2014, said in an announcement that this is the right time to transfer, as JD has reached a stage where it can self-finance for its own growth.
Its investment strategy is to invest in companies in the growth phase, support and share in the growth of the portfolio company, and exit from the investment when the invested company can raise equity. “The company and JD.com will continue to maintain their mutually beneficial business relationship, including their ongoing strategic partnership agreement,” Tencent said in an announcement.
However, the impact on JD.com is “definitely negative,” Everbright Sun Hung analyst Kai Kenny Ng told Reuters.
“While Tencent’s reduction in JD.com’s share may not have much of an impact on JD.com’s actual business when shares are transferred from Tencent to Tencent’s shareholders, the chances of Tencent’s shareholders selling JD.com’s shares as dividends will increase.” , He said.
The sale of JD.com has also raised questions about whether Tencent can try to unburden its investment in e-commerce Pinduoduo Inch. (NASDAQ 🙂 and food delivery giant Meituan (HK :), as regulatory pressure increases to reduce.
However, Tencent has no plans to abandon those investments because they are not as well developed, a source told Reuters.
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