Tencent Holdings Ltd (騰訊) cut its stake in Singapore’s Sea Ltd (冬海) by selling US$3 billion in shares, sparking a rout in the Southeast Asian gaming and e-commerce company.
The deal is likely to inflame speculation that Tencent is planning to pare its holdings in some of China’s biggest tech names, from Meituan (美團) to Kuaishou Technology (快手), as it pivots toward overseas growth and new areas such as the metaverse.
At the end of September, China’s social media and gaming leader controlled an investment portfolio of US$185 billion, Bloomberg Intelligence estimated.
The share sale comes less than a month after Tencent said it would hand out more than US$16 billion of JD.com Inc (京東) stock as a one-time dividend, an effort to divest most of its stake in China’s No. 2 online retailer.
The surprise move was seen as a response to Beijing’s push to curb anticompetitive behavior and open up closed ecosystems.
On Tuesday, Sea’s New York-listed depositary receipts fell 11.4 percent.
Tencent sold the shares at US$208 apiece, a discount of 6.9 percent to the previous close, term sheets distributed by banks arranging the sale showed.
In a subsequent US exchange filing, Tencent said it sold the shares at a net US$207, without elaborating.
Yesterday, an index of tech shares in Hong Kong fell to the lowest since May 2020, when firms backed by Tencent came under pressure as it pares investment in the sector amid Beijing’s regulatory crackdown.
Tencent is reducing its holding in Sea to 18.7 percent, it said in a statement, maintaining a sizeable stake in Southeast Asia’s most valuable tech company.
Sea, which in November raised its e-commerce outlook for a second time last year, has enjoyed a global surge in gaming and online retail amid the COVID-19 pandemic.
The divestment would provide the Shenzhen, China-based company with the “resources to fund other investments and social initiatives, while retaining a substantial majority of its stake in Sea and continuing to benefit from the company’s future growth,” it said.
Tencent has agreed not to sell more Sea shares for the next six months, terms of the deal obtained by Bloomberg News said.
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