Tencent agreed to buy USD 604 million in shares, while JD.com will invest an additional USD 259 million into Vipshop. The two companies are paying a 55% premium for the stock, which will give Tencent a 7% share and JD.com a 5.5% share in Vipshop. The investments will also allow each firm to appoint a board member based on shareholding terms following a two-year lock-up period.
Vipshop is best-known as an online discount retailer for brands, with a particular focus on the fashion space. It went public in a lackluster 2012 listing, but it is seen as a strategic ally for Tencent and JD.com in their ongoing battle with rival Alibaba.
Similarly, Tencent has made an investment in JD.com in 2014 — the company is the closest direct rival to Alibaba — and increased its funding to become its leading investor in 2016.
The investments in Vipshop will also be matched with strategic alliances. Tencent will help Vipshop into the wallet section on Weixin — the Chinese version of its popular WeChat app — while JD.com will grant the company a prominent position on its main page and within its Weixin ‘mobile store.’ JD.com said it will also “assist Vipshop in achieving certain GMV targets” through its ecommerce platform.
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