Chinese tech giant, Tencent Holdings Ltd on Thursday released a statement saying that the multinational conglomerate company have not set any targets for divestment of stakes held by the company.
A few hours ago, The Financial Times reported that Tencent Holdings Ltd has set a divestment target for the current financial year. The report stated that the company based in Shenzhen is planning to raise nearly 14.5 billion dollars by divesting its stake in companies including its stake in Meituan.
Meituan based in Beijing, China, is an online shopping platform which connects customers with local suppliers and producers. The company which has a presence in more than 1000 locations is famous in China for its food delivery business.
According to Tencent, all its Investments, domestic and foreign, were executed with the sole objective of generating strong returns for the company and shareholders. Since the investments are not based on any specific timelines or targets there is no question of divestment arising.
Tencent also mentioned that the company was not having any external pressure to offload stake in Investments. Various news reports had suggested that the central government in Beijing was putting pressure on tech companies to divest in various sectors.
The Financial Times reported that the move by Tencent Holdings Ltd to divest in Meituan was also part of its plan to ensure that anti-monopoly regulators keep an eye off the company.
Reports suggest that Beijing has been keeping a keen eye on Tencent for its dispersed investments in money-minting industries such as video gaming, social media, e-commerce, and entertainment. Tencent also has significant investments in the finance sector, which has been causing headaches for the Chinese government in the last few months.
Divestment in JD.Com and Sea Limited.
Even though unrelated, Tencent sold a significant part of its stake in JD.Com and Sea Limited. In last December, nearly 16 billion dollars worth of shares in JD.Com was distributed as a special dividend to Tencent’s Investors. In a transaction which occurred in January, the company sold 14.5 million American depository shares in Sea Limited. It helped Tencent to raise 3 billion dollars. Sea Limited based in Singapore is a company which focuses on e-commerce and the internet.
Crackdown on Tech Industry in China
From late 2020, the Chinese government and the Chinese Communist Party took several steps to regulate and retain their control of the tech industry in the country. Chinese tech industry which is one of the largest in the world revolutionised the way the country operates. As part of cracking down on these huge corporations, the government is using a hard fist to implement rules and regulations which control and coordinate these tech giants.
Tech giants like Alibaba and Tencent faced a lot of Investigations, fines, and regulations for alleged violations of industry policies.
