Tencent co-founder takes lead in HK$900m Chinasoft fundraising

PUBLISHED : Wednesday, 19 April, 2017, 3:02pm
UPDATED : Wednesday, 19 April, 2017, 10:34pm

Chinese philanthropist Charles Chen Yidan, the retired co-founder of internet giant Tencent Holdings, is looking to expand his portfolio of technology, media and telecommunications investments through the latest fundraising initiative of Chinasoft International.

Hong Kong-listed information technology services provider Chinasoft said in a regulatory filing on Wednesday that it has agreed to issue HK$900 million in convertible notes due in 2022 to Dan Capital Management, in which Chen is the substantial shareholder and founding investor.

“The technology, media and telecommunications industry is a key investment focus of the subscriber,” Chinasoft said.

Cayman Islands-based fund management firm Dan Capital is “committed to conducting long-term investment in the company”, it said. “In this convertible notes fundraising, Mr Chen will also be a major subscriber.”

Chen will have beneficial ownership of HK$540 million of the convertible notes upon completion of the subscription on or before May 18.

The technology, media and telecommunications industry is a key investment focus of the subscriber
Chinasoft statement

That interest by Chen, who is an adviser emeritus at Tencent and honorary chairman at its corporate charity fund, appears to show that his entrepreneurial acumen remains sharp, following his retirement in 2013 from his role as chief administrative officer at the world’s largest online games company by revenue and China’s top social messaging services provider.

Chinasoft, in which Huawei Technologies is a strategic shareholder, said the convertible notes subscription by Dan Capital was based on the Hong Kong firm’s exemplary performance over the years, its stable management team, a leading position in the information technology services industry on the mainland, and a vision for favourable long-term development.

The notes will be convertible into 180 million shares, which would make up about 6.9 per cent of Chinasoft’s issued share capital as enlarged by that allotment.

The estimated net proceeds from this notes issue total HK$899.3 million, of which HK$600 million will be used by Chinasoft for mergers and acquisitions activities, about HK$200 million for working capital and to repay certain loans, and about HK$100 million to upgrade its Jiefanghao information technology services platform.

Chinasoft last month reported a 57.9 per cent year-on-year jump in 2016 net profit to 442.1 million yuan (US$64.3 million) on the back of a 32.3 per cent increase in revenue to 6.8 billion yuan.

After working on several projects on the mainland since retiring from Tencent, Chen made a big splash last year by sponsoring the world’s most valuable education awards scheme.

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The Yidan Prize, which Chen unveiled in Hong Kong last May, will award nearly US$8 million to two education research and development projects each year.

“The prize is merely a vessel. The significance lies in the idea behind it, which is to push everyone to help foster the development of education,” Chen said at the award’s launch.