Tencent will invest $200 million in cash and additional business resources into the new business group for a minority equity ownership, the company said in a statement.
Under the agreement, a new entity called Zhuan Zhuan Entities will be created, into which 58.com will inject the Zhuan Zhuan app, along with its used goods related listing channels 58.com and Ganji.com, which the Chinese listing major had acquired two years ago. 58.com will continue its direct traffic and other business support to the Zhuan Zhuan Entities.
In April 2015, 58.com announced that it had agreed to acquire a 43 per cent stake in competitor Ganji.com’s parent in a cash and stock deal, where it paid $412.2 million in cash and about 34 million newly issued ordinary shares.
The transaction is currently expected to close in the second quarter of 2017.
Zhuan Zhuan is a mobile app enabling transaction of second hand goods. It allows sellers to upload pictures and a description of the used goods. After the item is sold and the buyer has received the item, the platform transfers the money to the seller to ensure transaction safety.
“Thanks to our platform, trading used goods is getting easier and can benefit everyone. Since our launch in November 2015, we have been picking up tremendous momentum by continuously focusing on improving the user experience and developing a robust online ecosystem. This transaction will immediately help to strengthen our support, and we are excited to explore how we can further enhance the overall service capabilities and technology of the business,” said Wei Huang, CEO of Zhuan Zhuan.
The online used goods market in China is gaining currency given that e-commerce conglomerate Alibaba Group’s online retail platform Taobao launched a platform for second hand products, Xian Yu. It is currently facilitating sales of about 200,000 used goods daily.
“Online transactions of used goods are very underdeveloped in China, but mobile technology and increasing user awareness are starting to create significant new opportunities. We are looking forward to accelerated growth in this market with more support from Tencent,” Michael Jinbo Yao, Chairman and CEO of 58.com.