With an eye on the growing live-streaming prize, Tencent said Wednesday it will pay $318 million for an additional 8.3% stake in Chinese video streaming app Bilibili, making a rare investment in a publicly listed company.
The Chinese internet giant, already an existing shareholder with a 3.7% stake, will buy 25.1 million newly issued American Depositary Shares in the Nasdaq-listed company at $12.67 each, representing a discount of 4.8% to the stock’s $13.31 Tuesday close.
Tencent’s endorsement was positively received by the market. Despite selling new shares at a discount that would dilute the interest of existing shareholders by 11%, Bilibili saw its share price rise nearly 8% to close at $14.37 on Wednesday.
Tencent is no stranger to being a strategic investor, but most of its investments are made in private companies. Year-to-date the company has invested in 70 companies, according to Dealogic, but only six of them are publicly listed.
Tencent’s single-largest investment in a listed company was a €369 million ($456 million) deal for 5% of Ubisoft Entertainment, a Paris-listed game developer most famous for first-person shooter and action role-playing games.
Wednesday’s investment comes six months after the Shanghai-headquartered company, commonly known as B Station in China, went public after raising $483 million in an IPO in April.
Bilibili focuses on a niche market: animation, comics and games – the so-called ACG subculture. It is one of China’s biggest live-streaming sites and serves as a platform for users to share self-generated content – which could be anything from makeup or hairdressing demonstrations to gamers showcasing their skills in online contests.
To be sure, Tencent is trying to strengthen its exposure to China’s highly fragmented online video market as live-streaming becomes an important form of mass entertainment. Naturally, it brings massive advertisement opportunities to online video sites.
Tencent Video, the tech giant’s own video streaming site, is already one of the most popular sites for movie and TV dramas in China. However, it competes head-to-head with Baidu’s iQiyi and Alibaba’s Youku Tudou, which have been spending massively to generate their own content or to acquire broadcasting rights.
In face of this, Tencent has been allocating resources to live-streaming sites that cater to a more specific client base.
In March, Tencent made two separate investments in two live-streaming sites popular for broadcasting video gameplays. It made a $630 million investment in Douyu and another $460 million in its rival Huya, which was subsequently listed on Nasdaq.
The tech giant is also the main financial backer of Kuaishou after it invested a combined $1.35 billion in two separate funding rounds in March last year and in January this year.
Kuaishou, which allows users to upload short videos ranging from 10 seconds to a few minutes, is weighing the option to list in Hong Kong next year.