Tencent has announced that the company will be distributing $16 billion worth of shares for the e-commerce group JD.com to shareholders.
The decision for Tencent to begin to tap into its vast investment portfolio comes as the Chinese government continues to crack down on antitrust issues throughout the tech sector. The Chinese government has been paying special attention to tech giants Tencent and Alibaba and has repeatedly fined both companies for their deal-making activities. By distributing DJ.com shares Tencent hopes to show the public that the company has no intention of empire building and has hopes of relieving pressure from the Chinese government.
Tencent has built an extensive portfolio by investing heavily in tech start-ups over the past decade. This has allowed the company to obtain an investment portfolio of roughly $190 billion. Tencent now believes that it would be best if the company began to halt investment and distribute the shares once the company has matured and no longer needs outside capital.
The recent announcement has caused Tencent shares to increase by 4% but JD.com shares have fallen by 9%. Shareholders of Tencent will receive one share of JD.com for every 21 shares of Tencent that they own. The remaining JD.com shares will likely be sold on the open market.
Source: Financial Times
