Tencent to sell stake in Singapore group for R48bn, to help fund 'social initiatives'

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Tencent  is seeking to sell a stake in Singaporean online gaming and e-commerce company Sea Ltd. to raise as much as R48 billion for new initiatives and philanthropic efforts to aid wealth redistribution.

The Chinese internet giant is offering 14.5 million shares in Sea, a stake of 2.6%, at an indicative price range of $208 to $212 each, according to terms of the deal obtained by Bloomberg News. 

The offer price represents a discount of as much as 6.9% to Sea’s close of $223.31 on Monday. Sea shares dropped 6.7% in U.S. premarket trading on Tuesday and have slumped 39% 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 will reduce 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 (R252 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.

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.

- With assistance from Edwin Chan.

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