Chinese fintech giant Tencent Holdings has shelled out approximately $300 million to purchase a 5% stake in Australian buy now, pay later company Afterpay (ASX: APT).
Afterpay lodged a substantial shareholding notice with the Australian Securities Exchange on Friday confirming Tencent had built its stake over a period of time from March to April.
The multinational started buying Afterpay shares on 27 March, outlaying between $17.18 and $22 a share for an initial 0.5% stake, according to the notice.
It kept buying most days until end of April, when it crossed the 5% disclosure threshold.
By 1 May, when Afterpay shares closed level, Tencent’s stake was worth about $390 million.
Tencent is a multinational conglomerate holding company with subsidiaries which specialise in internet-related services and products, entertainment, artificial intelligence and technology.
The company owns stakes in video game companies Riot Games and Supercell and has exposure to food delivery and e-commerce verticals.
Its instant messaging platform WeChat also allows users to make payments and book flights and hotels.
Digital platform business
Afterpay co-founders Anthony Eisen and Nick Molnar welcomed the investment as an opportunity to “learn from one of the world’s most successful digital platform businesses”.
“Being able to attract a strategic investor of this calibre is extremely rewarding and is a testament to our team and the strength of our differentiated business model,” Mr Eisen said.
“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.”
Tencent chief strategy officer James Mitchell said Afterpay stood out for its business model which aligns with consumer trends.
“[It offers a model] we see developing globally in terms of a customer-centric, interest-free approach as well as its integrated retail presence and ability to add significant value for its merchant base,” he said.
In morning trade, shares in Afterpay were trading 18.90% higher at $34.67.
Tencent’s stake in Afterpay comes at a time when economic relations between China-Australian are deteriorating and the Federal Government recently stepped in to halt investments from Chinese firms into two Australian exploration companies.