September 20, 2017 / 2:00 PM / a month ago

Tencent's stake purchase boosts CICC shares to all-time high

(Reuters) - Tencent Holdings Ltd’s (0700.HK) nearly 5 percent equity stake in China International Capital Corp Ltd (CICC) (3908.HK) sent the investment bank’s shares in Hong Kong to an all-time high.

A sign of Tencent is seen during the third annual World Internet Conference in Wuzhen town of Jiaxing, Zhejiang province, China November 16, 2016. REUTERS/Aly Song

Shares of CICC jumped as much as 16 percent following its announcement late on Wednesday that the internet giant would invest HK$2.86 billion ($366.6 million) in the company for a 4.95 percent stake.

The two companies will work together in financial services and capitalize on each others’ strength, the statement said.

Tencent’s investment comes as several technology-focused players enter financial sectors such as securities, banking and insurance.

Reuters reported last week that JD.com Inc (JD.O), Tencent’s rival and China’s No.2 e-commerce company, was in talks to buy a 24 percent stake worth about $1.5 billion in brokerage First Capital Securities Co Ltd 002797.SZ.

Tencent, the largest social media and gaming company in China and owner of the popular mobile application WeChat, with 938 million active users, is also one of the country’s largest fintech players.

Its payment service company Tenpay, which operates WeChat Pay, vies with Alibaba affiliate Ant Financial to be the largest mobile banking service provider in China. Tencent also offers wealth management through Licaitong, one of China’s largest mutual funds.

China’s internet giants have largely been the sources of capital for its FinTech firms, EY and DBS said in a joint report on China’s fintech development. Both Tencent and Alibaba are major shareholders of online-only bank WeBank, and of online-only insurer ZhongAn Online P&C Insurance Co Ltd (6060.HK).

CICC said in the statement that Tencent subsidiary Tencent Mobility will subscribe for 207.5 million new Hong Kong-listed shares of CICC at a price of HK$13.80 per share, representing an 11 percent discount to the stock’s Wednesday closing price.

Reporting by Ambar Warrick in Bengaluru; Editing by Jacqueline Wong

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