Chinese Internet giant Tencent Holdings Ltd. is raising about $2 billion in a syndicated loan for expanding its business in financial services and powering new acquisitions.
Tencent's move toward acquiring new funds comes as its race to outpace its top competitor, Alibaba Group, tightens. The two eCommerce giants have been in a constant battle to raise billions of dollars in bank loans to fuel their growth in China and abroad through acquisitions and new product launches, The Wall Street Journal reported.
Earlier this year, Tencent-backed Meituan-Dianping, the largest provider of on-demand services in China, raised a $3.3 billion funding round. The investment came after the Tencent raised $1.5 billion in a syndicated bank loan last November.
Tencent's bid to raise another $2 billion comes on the heels of Alibaba's fresh funding round, wherein it raised $3 billion in a syndicated loan.
The fresh funding, sources told WSJ, will help Tencent expand on its FinTech services. Last year, Tencent, which is the biggest shareholder of WeBank, began offering small loans to its messaging app WeChat's users. The move positioned it to compete with Alibaba's financial services affiliate, Ant Financial.
While the two companies work as fierce competitors in the Chinese market, they have come together to work in certain ecosystems that are now overcrowded with startups and old players. For instance, Alibaba and Tencent are participating in a $1.5 billion funding round for Chinese ride-hailing company Didi Kuaidi. In another such deal, Alibaba invested $1.25 billion in Tencent-backed Ele.me, a food delivery startup.
Tencent's $2 billion syndicated loan, which is set to close by next month, is reportedly being underwritten by Australia & New Zealand Banking Group, Bank of China, Citigroup Inc., HSBC Holdings PLC and Mizuho Financial Group. The five banks were also the underwriters for its $1.5 billion syndicated loan last year.