Tencent expands overseas ecommerce presence with 5% stake in Australian pay-later firm Afterpay
The Chinese company best known for its mobile games and WeChat social network has been looking for ways to move into smart retail and other areas overseas
Tencent Holdings has become a “substantial shareholder” in shop-now-pay-later firm Afterpay, the Australian company said in a statement, as the Chinese internet giant continues to expand its overseas investments in smart retail and fintech services.
Shenzhen-based Tencent purchased a 5% stake in Australia-listed Afterpay, the company disclosed in a filing to the Australian Securities Exchange on Friday. Afterpay, which allows consumers to shop online or in store and pay later by splitting the purchase into four installments, has more than 4.3 million active users and works with 30,600 merchants.
Afterpay’s shares opened 30% higher on Monday.
“To be able to tap into Tencent’s vast experience and network is valuable, as is the potential to collaborate in areas such as technology, geographic expansion and future payment options on the Afterpay platform,” Afterpay co-founders Anthony Eisen and Nick Molnar said in the statement.
Tencent’s Afterpay deal comes amid the Chinese company’s ambition to step up overseas investments and expand into new market segments such as smart retail. There are currently more than 800 companies in Tencent’s investment portfolio. More than 70 are publicly listed while a further 160 are unicorns – privately held start-ups with a market value of US$1 billion or more.
“More communications and cooperation with overseas entrepreneurs” will be pursued to expand the Shenzhen-based firm’s global footprint, Tencent president Martin Lau Chi-ping said at the company’s investment conference in January. “In the future, we will pay more attention to smart retail and payment platforms with the development of Tencent’s WeChat mini-app ecosystem.”
Tencent’s payments service WeChat Pay, which runs on its ubiquitous multipurpose app WeChat with over 1 billion users, and rival Alipay from Chinese e-commerce giant Alibaba Group Holding, dominate China’s digital payments scene and both have ramped up international efforts in recent years.
In China, each company has over 90% penetration rate among internet users, according to a 2018 report on China’s third-party mobile payments market by research firm Ipsos. Alibaba owns the South China Morning Post.
“Outside China we have actively invested in pioneering fintech companies, providing us with unique insights into emerging fintech services,” James Mitchell, Tencent’s chief strategy officer, was quoted saying in the Afterpay statement.
“Afterpay’s approach stands out to us not just for its attractive business model characteristics, but also because its service aligns so well with consumer trends we see developing globally,” he said.
Tencent is one of China’s most active tech investors, with 17 investments in the country during the first quarter of 2020, just behind venture capital firm Sequoia China, according to Chinese research firm IT Juzi.
(Abacus is a unit of the South China Morning Post.)