Tencent is in the final stages of negotiations with Kuaishou for a $2 billion investment in the short video platform’s $3 billion pre-IPO round, which would give Kuaishou a valuation of around $28.6 billion, media outlet LatePost reported.
Why it matters: In addition to promoting short video platform Weishi to gain more market share, Tencent has also been trying to leverage Kuaishou to compete with Douyin.
- Bytedance unseated Tencent and search giant Baidu in the first half of 2019 to take the second-largest share of China’s digital ad market, trailing only e-commerce giant Alibaba.
Details: The investment, which is expected to complete by the end of December, would give Tencent a nearly 20% stake in Kuaishou.
- The $2 billion investment is higher than the $1 billion to $1.5 billion reported in August, while the stake it would give Tencent is lower than the 30% to 40% that Tencent was pushing for at the time.
- Other investors in the round include Alibaba-backed Yunfeng Capital, Boyu Capital, Temasek Holding, and Sequoia Capital.
- Kuaishou and Tencent also scrapped a plan to form a joint venture focusing on video games and opted for a partnership for exclusive gaming cooperation.
- Tencent declined to comment when contacted by TechNode on Tuesday.
Context: Kuaishou could go public in the US next year to raise funds for its fierce competition with Bytedance’s Douyin, Bloomberg reported in September.
- Kuaishou founder Su Hua reportedly declined an offer from Tencent to acquire the short video platform, according to an earlier report from LatePost.