Tencent pushes back on report that its investments have slowed in second half, citing 30 ongoing projects

  • Tencent Investment said it has ‘continued its development this year’
  • Company has also expanded in India, Southeast Asia, Europe and South America
PUBLISHED : Wednesday, 24 October, 2018, 12:35pm
UPDATED : Wednesday, 24 October, 2018, 8:08pm

Chinese internet giant Tencent Holdings said it has kept up a steady pace of external investments this year, with more than 30 ongoing projects, contradicting a local media report saying it had cut back in the second half of the year.

Tencent Investment, the investment arm of the Shenzhen-based company, “has continued its development this year”, according to a statement issued in response to the report.

The statement, verified by the company, came after Chinese tech site 36kr reported that Tencent had notably cut back its investments in the second half of this year, especially for projects not seen as part of its core business.

Tencent said it has continued to fund and refinance companies in fields including content, smart industries, games and e-sports, as well as in cutting-edge areas such as artificial intelligence and autonomous driving. Tencent said it has also stepped up its global footprint in India, Southeast Asia, Europe and South America.

“Tencent Investment attaches great importance to the business growth of our target companies, but we also take into consideration the strategic value and market environment to make the best decision,” the company said.

Hong Kong-listed Tencent is also joining its biggest shareholder, South African media group Naspers, to invest US$600 million in Indian food delivery start-up Swiggy, according to a Bloomberg report. Tencent declined to comment on the report.

The company is also said to be in discussions with limited partners and family offices to raise a new fund of at least US$650 million, according to an earlier Bloomberg report.

Tencent’s aggressive investments in recent years sparked a debate in May about whether the internet giant had “lost its dream” after former tech editor Pan Luan wrote an online essay criticising the company for driving growth through investments rather than original innovation.

Tencent-backed Douyu’s live-streaming app pulled from stores

Jeffery Li Zhaohui, managing partner of Tencent Investment, defended the strategy of backing multiple start-ups in an interview with Businessweek China in August, saying the company is “not an investment bank”.

“It’s totally wrong to put investment and self-developed business on opposite sides,” Li said in the interview. “It’s a misunderstanding of us that when investment is properly done, it would be bad for our own self-developed business, or that a certain business is weak because Tencent is more focused on investment.”

In September Tencent executive Jonathan Lai, who led foreign investments and strategic partnerships, left the company to join New York-based Coatue Management. Lai’s team at Tencent was responsible for making investments in the US and Europe, backing dozens of companies including Epic Games, the publisher of the popular title Fortnite, and Discord, a messaging service for gamers.

Founded by billionaire Pony Ma Huateng, Tencent dominates China’s internet and media landscape with its instant-messaging software service QQ and social media platform WeChat, which saw monthly active users top 1 billion earlier this year.

At the same time, the firm has been expanding into different sectors including e-commerce and automobiles, with analysts attributing its investment strategy as a key factor behind its eightfold increase in market valuation since 2011.

Tencent’s shares, however, have plunged 40 per cent from their January peak, to HK$281.2 at Wednesday noon, resulting in a valuation loss of more than HK$1.7 trillion (US$210 billion).

It has invested over 100 billion yuan (US$14.5 billion) in more than 600 companies since 2011, Tencent President Martin Lau Chi-ping said in March.