Cash-rich Tencent aims for China listing, M&A

* Has $877 mln in cash, eyeing acquisitions

* Targets online games, value-added services for M&A

* To launch 3-4 new online games by end-2009

By Joanne Chiu

SHENZHEN, China, June 16 (Reuters) - Tencent Holdings (0700.HK), operator of China's largest instant messaging service, aims to list in China after regulators modify current rules, as it seeks to cash in on its big name in its home market.

Hong Kong-listed Tencent, whose popular QQ service is practically synonymous with instant messaging in China, is currently registered as a Cayman Islands business, which prohibits it from listing in China under current regulations even though it is based in the south China boomtown of Shenzhen.

But regulators are expected to change those rules in the near term to encourage overseas-listed, but China-based companies, such as Tencent and peers like Nasdaq-listed NetEase (NTES.O), Sohu (SOHU.O) and Sina (SINA.O), to list their shares back home.

"We have always been considering listing in the mainland China market and hope our clients can buy our stock, but this has to depend on the market situation and clearer regulations," Ma Huateng, a household name among China's Internet community, told reporters in a group interview at Tencent's headquarters.

He added that Tencent had a war chest of about 6 billion yuan ($877 million) in cash at end-March, which it could use for acquisitions, rather than distribute to shareholders in the form of more dividends.