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Tencent to up stake in PE-backed China South City

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Tencent Holdings will pay HK$822.5 million ($106 million) to increase its stake in China South City Holdings, a logistics center operator that counts PAG among its investors, to 11.55%.

According to a regulatory filing, Tencent will exercise an option on or before September 30 to purchase additional 244.8 million shares, which represents a 3.15% stake in China South City, at HK$3.36 apiece. Tencent bought a 9.9% stake in the firm in January.

China South City operates integrated logistics and trade centers in China. The company is expected to utilize Tencent's internet technology to improve its e-commerce platform. Tencent will also provide an online-to-offline (O2O) retail service experience to customers.

The companies agreed in June to promote China South City's online e-commerce services on Tencent's mobile instant messaging app WeChat.

Last year PAG purchased HK$975 million in convertible notes issued by China South City via the PAG Asia Opportunity Fund, a $275 million special situations vehicle that closed in 2006. Assuming full conversion of the 625 million shares, the PE firm will hold a 9.35% in China South City.

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