U.S.-listed Chinese online retailer JD.com and its investor Tencent Holdings Ltd. are set to invest almost $1.3 billion in BitAuto Holdings Ltd., a Chinese auto sales website provider whose New York-traded shares have risen by 140 percent in the past year.
JD.com and Tencent, which is best known for its WeChat mobile app, will acquire about $1.15 billion in new shares from BitAuto at $73.31 per share. The two companies will also invest an additional $250 million to BitAuto's e-commerce auto-financing unit, Yixin Capital, and give the website provider exclusive access to new and used car channels on JD.com's e-commerce platforms.
"Upon completion of the transactions, the three companies will work together to provide enhanced online automotive transaction services to car buyers across China," BitAuto said in a press release.
According to BitAuto CEO William Bin Li, the new investment will also solidify "BitAuto's industry leadership and build market share."
"Our goal has always been to provide China's new- and used-car customers with the best possible car purchasing experience," said Li.
Once the deal closes in the first half of 2015, JD.com and Tencent will respectively get 25 percent and 3.3 percent of BitAuto's outstanding shares, and JD.com will gain a seat in their board, according to the BitAuto press release. The two companies will also have a respective stake of 17.7 percent and 26.6 percent with Yixin Capital.
BitAuto's shares rose by almost 2,000 percent since late 2012 amid speculation of increased interest by Chinese consumers of purchasing cars online. After the deal was announced, BitAuto's shares surged by 7.6 percent at $90.10 in early trading on the New York Stock Exchange (NYSE) and closing at 6.45 percent at $83.71 on Friday. Shares of JD and Tencent, however, remained relatively unchanged.