Tencent acquires stake in Russian internet firm
Leading online games provider Tencent Holdings will pay US$300 million for a minority stake in a Russian internet firm as the company looks to expand into eastern Europe.
Shenzhen-based Tencent, operator of the mainland's largest social networking service, will acquire up to 10.6 per cent of Digital Sky Technologies (DST), which has a shareholding in major internet firms such as Facebook and Zynga.
In a statement filed with the Hong Kong stock exchange, Tencent chairman Ma Huateng described the deal as an opportunity to 'benefit from the growth potential of the Russian market'.
A report by J P Morgan Asia-Pacific Equity Research yesterday said as Tencent gains more experience in the Russia market and builds a relationship with DST's group of companies, it could gradually start further business-level co-operation.
DST's investment portfolio includes a batch of Russian companies such as mail.ru, a communications and entertainment company with 50 million registered e-mail accounts; Astrum Online, an online games developer and operator with more than 30 multi-player game titles; Forticom Group, a social network provider in Russia, Poland and the Baltics with around 40 million monthly users; and VKontakte, the No3 social network provider in Russia.
From 2005 to last year, DST raised and invested more than US$1 billion in over 30 companies.
Ma said DST is valued at about US$2.625 billion for the Tencent transaction. Tencent, which has cash and time deposit assets worth US$1.67 billion, will pay in two instalments - US$165 million within the next several weeks subject to certain conditions, and US$139.9 million 30 days later.
'The company believes that the Russian-speaking market is a lucrative one for its internet and internet-related businesses such as online advertising, social networking services and online gaming,' Ma said.
In 2008, Tencent invested US$7.5 million in MIH India.
