The company also announced that it is selling around 1.72 billion shares to five subscribers, including Tencent’s Poyang Lake Investment, at $0.53 HK ($0.068 USD) a piece. Other subscribers include Mega Prime Development, Gaocheng Fund I, Franchise Fund and Elephas Global Master Fund. That will bring Youzan’s net proceeds to $910 million HK, which will be used to fund system upgrades, product development, marketing, promotion of services and general working capital.
So far, Hangzhou-based Youzan has yet to turn a profit. In fact, it posted a loss of $839.4 million HK in the last financial year.
This is the latest investment for Tencent, which revealed aggressive investment plans earlier this year. Martin Lau, president of Tencent, said that “2018 was the best year for the company in terms of investment.”
Mobile banking has attracted investment from the company as well, most recently investing in German-based N26. Tencent made its debut in Latin America’s largest economy, paying $180 million for an undisclosed minority stake in Brazilian FinTech Nu Pagamentos SA (Nubank).
In addition to its investments, Tencent announced last year that it was restructuring for the first time in six years, as it faces tougher Chinese internet regulation. As a result, three content business groups are being consolidated into one unit, while a new group for cloud and smart industries will be created.
The company will “further explore the integration of social, content and technology that is more suitable for future trends, and promote the upgrade from consumer internet to industrial internet.” Furthermore, it will create a technology committee to boost its research and development.