Tencent In Talks To Raise Over $650M For New VC Fund

Chinese gaming and social media giant Tencent Holdings Limited is in talks to raise a new U.S. dollar-denominated fund of at least US$650 million, earmarking for its existing start-ups in the company’s investment portfolio.

Tencent is in discussions with limited partners and family offices on a new round of funding exceeding the US$600 million the company raised in 2017, said Bloomberg citing people familiar with the matter.

The final amount is yet to be decided as the company is still appraising investor appetite, said the source, requesting not to be identified because the matter is private.

Tecent did not immediately respond to China Money Network seeking for comments.

Tencent Investment, the internal venture arm of Tencent kick-starting in 2008, is one of China’s most prolific investors. It has invested over RMB100 billion (US$16 billion) in more than 600 companies during the past six years.

With its Tencent Industry Win-Win Fund established in January 2011, the company’s investment arm has helped create industry leaders including ride-hailing giant Didi Chuxing, on-demand services player Meituan Dianping, e-commerce upstart Pinduoduo Inc. and Tesla Inc.

Tencent Industry Win-Win Fund had an initial funding of RMB5 billion (US$721.66 million), which was later boosted to RMB10 billion (US$1.44 billion).

Tencent is not an investment bank, said Jeffrey Li, managing partner of Tencent Investment in an interview with Bloomberg Businessweek in August. The comment is in response to criticism from industry watchers who say that the company has relied too much on investing in other businesses, instead of innovating its own core businesses.

While evaluating a company and making a decision on investment, Tencent Investment seeks to reach a balance between the company’s strategic value and financial value. "Some businesses can not immediately generate profits, or boost the company’s valuation. But they may have indirect value by acting as a strong backing to Tencent’s exiting businesses," said Li.

Tencent announced its first reshuffle in six years to create a new group for cloud and smart industries in early October.

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