Tencent cuts stake in Singapore’s Sea, raises $3 billion

TENCENt

Chinese gaming and social media company

Tencent Holdings Ltd has sold 14.5 million shares in Singapore-based gaming and e-commerce firm Sea Ltd at $208 each to raise $3 billion, Reuters reports.

The Chinese gaming and social media company reduced its stake in the technology group to 18.7% from 21.3%.

Tencent still plans to retain the substantial majority of its stake in Sea for the long term.

Sea’s shares fell 11.4% on Tuesday in New York to $197.8 following the divestment news.

Tencent has also agreed to cut its voting stake in the Sea to less than 10%.

“We believe with a lower voting right control, it could reduce any potential conflict if Tencent’s gaming teams plan to publish more games directly in global markets and help reduce any potential geopolitical friction if/when Sea plans to expand more strategically into new markets in more countries,” Citi’s analysts said in a report on Wednesday.

Sea has recieved a notice from Tencent and its affiliates to convert all their Class B ordinary shares.

Upon conversion, all outstanding class B shares of Sea will be beneficially owned by Forrest Li, the founder, chairman and CEO of Sea, Reuters reports.

Sea is Southeast Asia’s most valued company and has a market capitalisation of $110 billion.

According to Reuters, Tencent will be subject to a lockup period that restricts further sale of Sea shares by Tencent during the next six months.