Tencent to buy 15% stake in JD.com ahead of IPO

The move comes as JD.com - formerly known as 360Buy or Jingdong.com - is seeking to raise $1.5 billion through an US IPO.

According to a regulatory filing, Tencent will subscribe 351 million ordinary shares issued by JD.com, as well as subscribing to an additional 5% of the IPO. Terms of the IPO have yet to be announced. Tencent's president Martin Lau will join JD.com's board of directors.

As part of the agreement, Tencent will support JD.com's e-commerce growth by offering access to users on social-networking mobile applications QQ and WeChat, and other platforms it owns. At the same time, JD.com will take over Tencent's e-commerce units QQ Wanggou and PaiPai. It will also take a minority stake in Yixun, Tencen't online retailing platform, with an option to acquire the remaining stakes in the future.

The strategic tie-up is challenging market leader Alibaba Group, which is also expected to go public this year, probably in the US. As of September, the Beijing-based JD.com had a 17.5% market share based on transaction volume.

Unlike other B2C retailers, including Alibaba, which rely heavily on third-party logistic operators, JD.com has invested in self-supported delivery services - purchasing goods and keeping in its own warehouses and making uses of its own logistic systems to deliver.

Tencent and JD.com will also cooperate on online payment services to improve users' online shopping experience.

"Our strategic partnership with JD.com will not only extend our presence in the fast-growing physical goods e-commerce market, but also allow us to better develop our enabling services such as payment, public accounts and performance-based advertising network to create a more prosperous ecosystem for overall e-commerce activities on our platforms," Martin Lau, president of Tencent, said in a statement.

JD.com raised $400 million through a Series F round of funding led by Kingdom Holding, an investment company controlled by Prince Alwaleed bin Talal, a Saudi Arabian billionaire, in February 2013.

The commitment came barely three months after Ontario Teachers' Pension Plan and Tiger Global invested $400 million and nearly two years after DST Advisors and led a consortium that put in $1 billion.

Early investors in the company included Capital Today, Luminary Capital and Bull Capital Partners.

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• Topics
• Greater China
• Consumer
• Expansion
• China
• e-commerce
• TMT
• IPO
• Consumer
• Tencent