Tencent pays $84m to up stake in Chinese discount sales site Vipshop

Tencent Holding Ltd

Tencent has picked up more shares in the Chinese online discount sales website Vipshop, paying about $84.19 million to increase its stake in the firm from 8.7 per cent to 9.6 per cent to further boost its presence in the country’s hyper-competitive e-commerce space.

The Chinese social and gaming giant purchased an aggregate of 6.47 million American depositary shares (ADSs) in Vipshop for a combined $84.19 million in the open market through a series of transactions from November 25 to December 13, according to a Vipshop filing with the New York stock exchange on Tuesday.

Tencent acquired the shares through a wholly-owned subsidiary with a weighted average trading price of US$13.01 per ADS. Upon the completion of the deal, Tencent remains the second-largest shareholder of Vipshop after the company co-founder and CEO Eric Shen Ya, who holds a 12.7 per cent stake.

The enlarged stake could help Tencent further grow its capabilities in the Chinese e-commerce field, which is prevailed by homegrown fellows including Alibaba, JD.com, and online group buying platform Pinduoduo.

Amid the continued integration of online and offline retail sales, China’s piece of the worldwide online retail pie, already over half, will grow even larger in the next few years with a continued double-digit growth year to year through 2023, according to ResearchAndMarkets.com.

Tencent and Chinese e-commerce major JD.com inked a deal with Vipshop in December 2017 to jointly inject $863 million into the online shopping business to own 7 per cent and 5.5 per cent shares, respectively. Tencent and JD.com saw their two-year Vipshop share lockups expire this Wednesday.  

The recent share acquisition is the latest move taken by Tencent to lift control over the Guangzhou-based discount retailer in a series of purchases in the past two years. Tencent bought an addition of 5.8 million shares in Vipshop in late 2018 to grow the stake to 7.8 per cent, before it further expanded the ownership to 8.7 per cent this March after acquiring another 5.82 million ADSs for a combined $43.41 million.   

Besides Tencent, JD.com also increased its shares in Vipshop to 7.6 per cent after spending a total of about $55.76 million for over 5.91 million shares between June and August, shows filings with the U.S. Securities and Exchange Commission (SEC).

Founded in August 2008 and raised $71.5 million in an initial public offering (IPO) in the New York market in March 2012, Vipshop offers branded products to consumers in China on the vipshop.com website through flash sales – which refers to the selling a limited quantity of discounted products or services for a fixed period of time.

The company’s total net revenue grew by 10 per cent year-over-year to 19.6 billion yuan ($2.80 billion) in the third quarter of 2019 from 17.8 billion yuan ($2.54 billion) in the prior-year period. Its gross merchandise volume (GMV) increased by 17 per cent year-over-year to reach 31.7 billion yuan ($4.52 billion) in the same period, according to the latest financial results.

Singapore Reporter/s

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

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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.