Tencent Plans to Sell a Stake in Singapore’s Sea for Up to $3 Billion

Tencent has sold $3 billion of shares in Singaporean online gaming and e-commerce company Sea as it seeks funds for new initiatives and philanthropic efforts to aid wealth redistribution.

The Chinese internet giant priced 14.5 million shares in Sea at $208 each, the bottom end of an indicative range, according to terms of the deal obtained by Bloomberg News.

The offer price represents a discount of 6.9% to Sea’s close on Monday. The stock fell as much as 9.4% in early New York trading on Tuesday and has slumped more than 44% from a high hit in October.

Less than a month ago, Tencent announced a plan to hand out more than $16 billion of JD.com Inc. stock as a one-time dividend in an effort to divest most of its stake in China’s No. 2 online retailer. The surprise move was seen as being in response to Beijing’s push to curb anticompetitive behavior and open up closed ecosystems.

Tencent is reducing its holding in Sea to 18.7%, it said in a statement. The divestment will provide the Shenzhen-based company with “resources to fund other investments and social initiatives, while retaining a substantial majority of its stake in Sea and continuing to benefit from the company’s future growth,” it said.

In August, Tencent doubled the amount of money it’s setting aside for social responsibility programs to 100 billion yuan ($15.7 billion) as Beijing forges ahead with its “common prosperity” campaign that includes income regulation and redistribution.

Chinese tech stocks have been battered by a year of regulatory action, spanning sectors including online education, gaming and food delivery, slowing growth at tech stalwarts like Tencent and Alibaba Group Holding Ltd.

Tencent has agreed not to sell further Sea shares for the next six months, the terms show.

Goldman Sachs Group Inc., Bank of America Corp. and Morgan Stanley are arranging the sale.

Prosus (majority owned by Naspers) is Tencent’s largest shareholder, with a 29% stake.

© 2022 Bloomberg L.P.

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