First global issue for Tencent raises US$600m

Mainland internet giant Tencent has completed its sale of US$600 million worth of five-year US dollar-denominated bonds, the company's first international debt offering.

Shenzhen-based Tencent - which operates popular web portals that provide online games, social networking, instant messaging and other services - expected net proceeds to reach US$592.44 million after deducting underwriting fees and other expenses.

In a filing with the Hong Kong stock exchange yesterday, the company said the bonds due in 2016 were not secured by any of its assets.

These senior unsecured notes bear an interest rate per year of 4.625 per cent and are listed on the Singapore Exchange Securities Trading.

The bonds, which Tencent described as the first international debt issue by an Asian internet company, started trading yesterday.

Tencent president Martin Lau Chi-ping said the successful pricing of the notes showed that 'investors have responded favourably to our business model, financial policy and financial profile'.

US and Asian investors each accounted for 45 per cent of the allotments, while Europe made up the rest, according to a report by Thomson Reuters publication International Financing Review.

It said funds received 65 per cent, banks 21 per cent, retail investors 8 per cent, and insurers and central banks 6 per cent.

Goldman Sachs (Asia) and the Singapore branch of Deutsche Bank served as joint global coordinators. Other financial institutions involved in the bond offering were Credit Suisse Securities (Europe), HSBC, Barclays Capital, Citigroup Global Markets, and Australia and New Zealand Banking Group.

Tencent said net proceeds from the notes offering would be used for general corporate purposes, including working capital, replacing some of its existing short-term borrowings and potential strategic acquisitions.

Hong Kong-listed Tencent, in which South African media company Naspers is a major shareholder, has been on the acquisition trail to boost its operations on the mainland and expand overseas.

This year, it bought stakes in US video game developer Riot Games, software company Kingsoft, movie producer Huayi Brothers Media and online travel services provider eLong.

The company also took a minority shareholding last year in Russian internet firm Digital Sky Technologies, which has since been renamed Mail.Ru Group.

'Looking forward, we remain committed to maintaining our net cash position and credit profile, as well as our investment-grade credit ratings,' deputy chief financial officer John Lo Shek-hon said.

Shares of Tencent rose 0.59 per cent yesterday to close at HK$153.90.