Tencent is reportedly seeking to sell its stake in Singapore's online gaming and e-commerce company Sea to raise up to $3.1 billion. The money will be used for new initiatives and philanthropy.
Tencent will sell about 14.5m Sea shares, or about 2.6 per cent, at indicative prices of $208 to $212 per share, according to the terms of the deal. Tencent's stake in Sea will fall to 18.7 percent from 21.3 percent upon completion of the deal.
Tencent's price represents a 6.9 per cent discount to Sea's closing price of $223.31 on Monday. Sea shares fell 6.7 per cent in premarket trading on Tuesday and are 39 per cent below their October high.
The move comes less than a month after Tencent announced it would give its roughly 460m jd.com shares to shareholders in the form of an interim dividend. After the dividend payment, Tencent's stake in JD.com will be reduced from 17% to 2.3%, and it will no longer be the largest shareholder.
On the Sea stock sale, Tencent said the proceeds will be used to fund other investments and some social activities, such as philanthropy. Last August, Tencent doubled its funding for "social responsibility" programmes to rmb100bn ($15.7bn).
Meanwhile, Tencent, which will still own more than 18 per cent of Sea, will continue to benefit from Sea's future growth. Tencent also pledged not to sell any further Sea shares in the next six months
Goldman Sachs group Inc., Bank of America Corp., and Morgan Stanley are leading Tencent's Sea share sale.