Chinese internet and mobile services firm Tencent has agreed to invest USD 736 million in exchange for approximately 19.9 percent equity interest in Chinese online marketplace 58.com. Tencent has agreed to purchase 36,805,000 Class A and B ordinary shares at a purchase price of USD 20 per ordinary share, corresponding to USD 40 per American Depositary Share,each representing two ordinary shares. In addition, 58.com will use part of the proceeds from this transaction to repurchase 27,603,750 ordinary shares from existing pre-IPO shareholders. Tencent and 58.com have agreed to use each other as the preferred partner in local services. Tencent and 58.com plan to jointly build out online-to-offline (O2O) services leveraging the combined features of their respective platforms.
58.com will capture traffic from Tencent’s various online properties such as QQ, Weixin, QQ.com, and QQ browser. Integrating 58.com’s services into these properties will expand 58.com’s user base, allowing users to access social tools to find recommended merchants. For Tencent, the investment further strengthens its expanding O2O ecosystem in China, which also includes Dianping, Didi Dache, JD.com, Leju. Its social user base is expected to benefit from the broadening local services offering, select vendors or merchants leveraging social sharing online.
Tencent will help small and mid-sized enterprises and other merchants communicate with consumers via Weixin Official Accounts system or Enterprise QQ system, and complete transactions using Tencent’s online payment services. Merchants will have access to customer relationship management and consumer targeting via location-based functions.
