Tencent confirms buying ailing Malaysian streaming platform iflix

FILE PHOTO: People visit Tencent's booth at the World 5G Exhibition in Beijing, China, Nov. 22, 2019. REUTERS/Jason Lee/File Photo

Chinese internet giant Tencent Holdings has confirmed it has purchased Malaysia-headquartered video streaming platform iflix’s content, technology and resources as it seeks to expand its international streaming platform WeTV across Southeast Asia.

“This is in line with our strategy to expand our international streaming platform, WeTV, across Southeast Asia and provide users with international, local and original high-quality content in a wide range of genres and languages,” Tencent said in a statement, responding to a DealStreetAsia query.

Through the purchase, WeTV will further extend its presence in the video streaming industry across Southeast Asia to reach a broader audience base within the region, the statement added.

Tencent’s confirmation comes hours after DealStreetAsia published a report that iflix told its employees that the Chinese company was acquiring its loss-making business.

Terms of the deal are not known, but pricing is expected to have valued iflix at a significant discount to what the company could have gotten from an initial public offering (IPO) before the COVID-19 pandemic soured investors on loss-making companies.

In an e-mail sent to employees on Tuesday, Tencent, on behalf of iflix, offered the platform’s workforce the option to transfer to the local unit of the internet giant with a June 25 deadline to accept the offer.

When contacted by DealStreetAsia, iflix declined to comment.

DealStreetAsia reported on June 10 that the platform was in talks with two potential acquirers, who were believed to include companies based in Greater China.

The troubled iflix was weeks away from a debt crisis. Holders of just over $47.5 million of convertible debt could have forced the company to repay them if the company is not listed by July 31. Two iflix co-founders Catcha Group co-founders Patrick Grove and Luke Elliott stepped down from its board on April 9, while distressed asset specialists Ryan Shaw and John Zeckendorf from Mandala Asset Solutions joined a month later.

According to a Bloomberg report, Tencent will not take on iflix’s debt.

As of September 2019, iflix had just $12.7 million of cash reserves, and the company estimated that it would only have enough capital for ongoing corporate and administrative overheads until November 30, 2019. iflix has not announced any additional funding since then.

The company recorded a net loss of $158.1 million in 2018 as its operations burnt through $25.5 million of cash, resulting in a net liability position of $68.6 million as of end-2018. That included $77.7 million of negative working capital.

iflix had raised over $360 million from investors including Fidelity International, Hearst Communications, EDBI and Liberty Global.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.