Tencent to Buy 5% Stake in Investment Bank CICC

Tencent Holdings agreed to buy an almost 5% stake in China’s leading investment bank China International Capital Corp

Tencent Holdings agreed to buy an almost 5% stake in China’s leading investment bank China International Capital Corp

Shares of CICC jumped by a record after it said Tencent is paying HK$2.9 billion ($372 million) for roughly 5% of China's oldest investment bank.

Tencent Mobility, a unit of Chinese internet company Tencent, will subscribe for 207.5 million new Hong Kong-listed shares of CICC at a price of HK$13.80 per share, representing an 11 percent discount to the stock's Wednesday closing price.

The transaction will make Tencent the third-largest shareholder in CICC, marking another investment by Chinese tech majors in the traditional finance industry amid the rapid development of the fintech sector.

In addition, CICC said the two companies will establish a steering committee co-chaired by senior executives from both sides to ensure the cooperation proceeds effectively.

Tencent President Liu Jiping said Tencent is looking for cooperation with CICC in developing financial products and services, combining Tencent's technology with CICC's capacity in wealth management. The partnership will serve as an important step toward CICC's goals of expanding the scale of its wealth management business and accelerating wealth management transformation using financial technology.

Founded in 1995, CICC was China's first joint venture investment bank, a tie-up between the state-owned China Construction Bank and Morgan Stanley. It has already invested in brokerage firms Futu Securities and Huatai Securities.

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