Tencent Holdings Limited has agreed to invest HK$2.9 billion (US$371.6 million) for a 5 per cent stake in one of the country’s most prestigious investment banks, China International Capital Corporation (CICC), the latter announced in a filing to the Hong Kong Stock Exchange late on Wednesday night.
The investment marks the linking of two of China’s most pioneered tech and finance giants, underlining just how strong financially the country’s new technology firms have become, replacing foreign banks as favoured partners of China’s banks.
People close to the deal told the Post the agreement has complementary advantage for both sides, particularly in fintech development.
CICC was founded in 1995 as China’s first joint venture investment bank, between the state-owned China Construction Bank and Morgan Stanley. The latter sold its stake in CICC in the year 2010.
Tencent has agreed to subscribe for around 207.5 million new H-shares of CICC, representing 12.01 per cent and 4.95 per cent, respectively, of the total issued H-shares and the total issued shares of CICC, on a fully diluted basis.
The subscription price is set at HK$13.80 per share, representing a discount of around 10.97 per cent on its closing price of HK$15.50 on Wednesday.
The completion of the subscription is subject to the approvals of relevant regulatory authorities.
“Simultaneously, CICC and Tencent have also entered strategic cooperation framework agreements,” the filing said.
“To promote the effective implementation of such cooperation, CICC and Tencent will set up a steering committee, co-chaired by the senior management of both companies.”
Source: South China Morning Post
