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| Tencent loses $16 billion stake in JD.com |
Tencent is reducing its stake in JD.com, China's second largest e-commerce company, to be on the safe side as Beijing cracks down on tech giants to control its growing power and influence.
According to reports from the Chinese gaming and social media giant, the company plans to distribute its $16 billion + JD.com stock as a one-time dividend to its shareholders.
The technology company will begin shipping 460 million Jordanian dinars of common stock to shareholders in March.
The shares that Tencent intends to issue represent 86.4% of JD.com's shares and 14.7% of the total shares issued by JD.
The company currently owns 17% of JD.com. However, the allocated share has fallen to 2.3%, which means that he will not become the largest shareholder in JD.com.
According to JD's latest annual report, JD founder Liu Qiandong owns 13.9% of the shares and becomes the largest shareholder. Walmart ranked second with a share of 9.3%.
Tencent's sudden demise comes at a time when China's internet giants are under enormous pressure from Beijing.
In the past year, China has stepped up its review of the technology industry. It has published detailed rules to combat unfair competition. The company was sentenced to a large fine. Some companies are calling for a deep overhaul of their operations.
Tencent said JD.com has reached a position where it can fund its own growth. Hence, it is time to transfer most of the equity to its shareholders.
This move could weaken Tencent's market dominance. This is likely to move in the direction of fairer competition and is more in line with the agenda of the Chinese authorities.
Tencent's move comes as Beijing steps up its scrutiny of industry regulators
As part of the deal, Tencent Chairman Andy Lau will step down from JD's board of directors. The two companies said in separate statements that they continue to have a mutually beneficial working relationship, including their existing strategic cooperation agreement.
Over the past decade, the company has been one of the country's most active investors, sponsored hundreds of tech startups.
By September 30, it had also slowly built a publicly traded portfolio of $190 billion, roughly a third of its total market capitalization.
One of the most valuable shares is a 16 percent stake in Pinduoduo E-Commerce Group. and 17% of the Meituan Waimai group. Nearly 18% of Kuaishou's short video applications. He also owns stakes in US companies such as Snapchat and Tesla.