Tencent is now closer to making what could be the "biggest-ever purchase of a mobile games maker," according to Reuters. (Photo : Facebook)
Tencent Holdings Ltd has started a vigorous round to raise an estimated amount of $450 million for its financial affiliate WeBank. This will value WeBank at $5.5b, and the stakes of Tencent will be kept at 30 percent, reports said.
China's online banking sector is emerging as a good area to invest, and the main players like Tencent, Alibaba and Baidu Inc. are all set to toughen the competition. As the past trends are clearly showing, more Chinese are going for credits and the consumer goods-loan market is estimated to touch $3.5 billion this year. Major players are eyeing in this rapidly growing market.
Meanwhile, many growing financial companies and online services have started extending credits to comparatively smaller business organizations and individuals, which are not served or under served by the state lenders. This trend has catalyzed the loan market.
Thus, by all means, online banking has become a hotcake among the investors, and the effort of Tencent is receiving tremendous response from different corners of the world. According to one report, Temasek Holdings Pte states Investment Company of Singapore is among others who are taking part in this round. Another report says that Warburg Pincus LLC, a private equity firm based in New York, is also a part of WeBank's round.
Since, more Chinese seeks credit, it is said that WeBank and Alibaba Group are eyeing for an estimated $3.5 billion, or an equivalent of 23 trillion Yuan, household loans market.
The growth in the online financial service sector of China attained a high momentum in the past few years, and many market watchers are of the opinion that the trend will continue for quite some time. Hence, investors are seeing this as a good opportunity. This effort will also help to improve the overall economy of China, as it can boost the total credit, said a trader who preferred to be unnamed.
