Tencent shares plunge on selling $3b Sea shares

Update (January 5, 11:20 am): Added details on Tencent’s stake sale in Sea Group 

Tencent said it will sell over US$3 billion worth of its stock in Southeast Asian tech giant Sea Group, dragging the Chinese internet company’s shares to end nearly 13% lower on Tuesday.

While Tencent’s equity interest in Sea will fall from 21.3% to 18.7% , the former said it will keep the “substantial majority” of its equity in Sea “for the long term” and not sell any more shares for the next six months.

Photo credit: Tencent

Proceeds from the share sale will fund other investments and social initiatives, Tencent said in a statement.

Sea Group has also announced its plans to increase the voting power rights of CEO Forrest Li to 57% from the current 54%. At the same time, it will reduce the voting power rights of investor Tencent to less than 10%.

Sea Group said that the decision will be taken during its annual general meeting held on February 14, where shareholders are expected to vote on it.

Li’s voting power in the company will increase as each class B ordinary share will see an increase in voting power from three votes to 15 votes. At the same time, Tencent will convert all its class B ordinary shares to class A ordinary shares, for which it has already sent an “irrevocable notice” to Sea Group.

Once the conversion is completed, Li will own all of Sea Group’s class B ordinary shares.

“The board believes that, as Sea has scaled significantly to become a leading global consumer internet company, it is in the best interests of the company in pursuing its long-term growth strategies to further clarify its capital structure through the contemplated changes outlined above,” said the company in a statement.

See also: Sea could be massive in the metaverse if it wants to be

Last month, Sea’s ecommerce arm Shopee faced calls for a ban from an Indian trade body due to its alleged “Chinese roots” and claims of it being operated by Tencent. This came only a few months after its entry into the country.

In the past, the Indian government has banned several Chinese apps, and it has also taken a tough stance on firms backed heavily by Chinese investors.